When you are receiving installment payments on an award amount from a structured settlement, you may later decide to sell your settlement to a structured settlement company. Structured settlement companies work with individuals to set up a flexible purchase terms. These companies do charge a fee for their services, which is why it is in your best interest to shop around and find a company that offers the lowest fees for their services, and the best customer service. Ultimately, structured settlement companies serve as brokers and will coordinate the transaction.

How Structured Settlement Companies Work

Structured settlement companies help people who are receiving annuity payments and want to cash in on their settlement. A structured settlement company will buy your annuity payments for a lump sum. Their purchase price is usually a percentage of what your total annuity is worth. The company can choose to buy all of the payments that are still outstanding, or just some of the payments for a certain amount.

Buyouts like these are closely monitored by the government and are subject to several Federal and State laws. It's generally a good idea to learn about the laws and regulations that pertain to these types of transactions so that you can get your money in a timely manner. You can work with a financial advisor in your area to learn about state legislation and what limitations there may be in regards to your transaction.

Selling to a Structured Settlement Company

One of the most important things to remember when you are selling to a structured settlement company is that you can only receive a percentage of the original settlement amount. The structured settlement company would buy all of the payments from you for a certain amount or just some of the payments so you would still continue to receive the rest in installments as stated in the original settlement agreement. Structured settlement companies will impose a fee for the transaction, and this fee may be calculated as a percentage of the total settlement amount, or it may be a flat fee. This is why it is in your best interest to shop around and find a company that offers the most competitive fee and all of the services needed to ensure the transaction goes smoothly.

Getting a large payout like this can help you take care of some emergency expenses or unplanned for expenses, and may be the best way to manage your cash flow for the time being. However, getting a large lump sum payment from structured settlement companies isn't always the best option. Those who are not very good with their money could end up spending all of their funds too quickly so they would have actually been better off with an installment arrangement.

Settlements are a form of a guaranteed payment, and some people simply feel more secure with this fact. Selling your settlement to a structured settlement company has both pros and cons, and you need to be aware of any laws and limitations that may prevent you from receiving all of the funds you want or need. Working with a financial advisor can help with this process, and also ensure that you will receive the payment you agreed upon on time.