Monday, November 5, 2007

Why Are Structured Settlements Purchased

Filed under: Structured Settlements — Structured Settlement Expert @ 8:07 pm

Many personal injury cases are settled out of court resulting in a “structured settlement.” A structured settlement is a financial arrangement in which the recipient of a financial award can receive periodic payments paid out by an annuity set up by the responsible party.

The recipient will continue to receive the payments from the structured settlement annuity throughout the life of the settlement terms, unless of course, the recipient feels at some point that they require a lump sum of money to keep pace with their changing financial circumstances.

At this point, the structured settlement recipient may turn to a company that purchases structured settlement payments. This purchasing company pays their client a lump sum of money for all or part of their future structured settlement payments. In turn, the client receives the money they need – in cash - to address significant debt, pay for education, purchase a house, etc.

Many may wonder why companies are willing to purchase structured settlements. The sale of future payments benefits both parties giving the seller access to a larger sum of cash immediately and the purchaser receives the regularly recurring payments over time.

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