The amount of money you receive should you sell your structured settlement annuity depends upon the following factors:
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Dates Structured Settlement Annuity Payments are Due
The date that your structured settlement payments are due is the most important factor when determining how much money you may be able to receive should you sell your annuity payments. It is called Present Value. Basically the closer your payments are to today’s date the more money they are worth and the further away they are due the less they are worth. For example, a lump sum payment due in the year 2012 is always going to be worth more than a payment due in the year 2020. It's a simple concept really. The futher away a payment is due, the less money it is worth today. Think about it. If you had two choices for 1 million dollars what would you choose? 1 million dollars cash that will be paid to you tomorrow or 1 million dollars cash that will be paid to you in 24 years?
Well if you're like most people you would have chosen the million dollar cash payout tomorrow. Wouldn't that be nice! Quite simply the earlier an annuity payment is due the more value it will have. This is why when you cash out future payments you will often hear talk of "present value" or "time value of money". Remember when your parents or grandparents would tell you that a candy bar cost a nickel? Well that is true and that also is a major reason why money in the future is never as valuable as money now. That part of it is called inflation. In fact, some annuities that are paid out as a result of a structured settlement will have a 3% or even 5% annual cost of living increase in order to account for the cost of inflation.
Amount of Structured Settlement Annuity Payment
Keep in mind that when you sell your structured settlement annuity payments you are also dealing with current market value. In other words how much is a particular structured settlement funding company willing to pay you to buy your future annuity payments. This changes depending upon certain current economic factors. The amount of your payment will of course also determine how much money you will receive. The bigger the payment, the more money you will get. Monthly payments are a little trickier but if you sell them, the amount of money you will receive is still based on present value. The first monthly payment you sell will always be worth the most. The last monthly payment you sell will always be worth the least. Therefore if you sell 10 years of annuity payments from October of 2011 through September of 2021, the first payment in October of 2011 will give you the best return and the last payment in September of 2021 will give you the least return since it’s the furthest way. Everything in between is basically prorated.
The Rating of the Insurance Company that Issues the Annuity
The insurance company that issues your annuity is also an important factor in determining how much your structured settlement is worth. Each company is issued a "strength" rating in regards to the overall health of the company and their ability to meet their fiscal obligations. They are issued ratings by a few different agencies. The agencies that rate insurance companies are as follows:
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Go ahead and check out your annuity issuer’s rating. If they are "A" or "A-" rated then you have nothing to worry about. I recommend using the link to Standard and Poor as it is a direct link to the ratings page. It appears that Moody’s require you to set up an account. In any event these companies rate the insurance issuer’s ability to pay and overall financial strength. There are some structured settlement factoring companies that will not do transactions with companies that are not rated highly. There are a few insurance companies that have even gone bankrupt or are in what’s called receivership which is a form of bankruptcy in which a company can avoid liquidation by reorganizing with the help of a court-appointed trustee. Almost nobody will do a transaction with a company that is in receivership as there is a likelihood they will not be paid when your future payment becomes due even though you assigned it to them through a court order. Think of these ratings similar to people’s credit reports. It’s basically the same thing, just on a different scale. It’s all about risk and the purchasers of your settlement want to know how much risk is involved before they give you a lump sum of cash for your future payments.
Discount Rate Being Charged on Structured Settlement Annuity Transfer
The interest rate or discount rate that is being charged when you sell your structured settlement annuity is extremely important to know. The rate can range anywhere between 8-25%. Some may claim lower rates than 8% but that is a rare instance. When you work with us you can be assured that we will try to get you the best rate possible. We invite you to shop around. Corona Capital's funding source and low cost of doing business allows us to offer such low discount rates. Just one percentage point could mean thousands of dollars to you. You can use a present value calculator to give yourself an idea as to how much money you may be able to get if you sell your structured settlement annuity. To learn more about the discount rate applied to structured settlement annuity transfers please review this article. If you have any further questions our would like to sell your structured settlement annuity please contact us.
Articles Regarding the Sale of Annuity, Lottery, Structured Settlement and Life Contingent Structured Settlement Payments
- Get a Quote Before You Sell Your Annuity or Structured Settlement
- How Much Money Will You Get Should You Sell Your Structured Settlement Annuity?
- How to Sell a Structured Settlement Annuity
- How to Get Life Insurance to Protect a Life Contingent or Non-Guaranteed Structured Settlement Annuity Transfer
- Know Your Discount Rate Before You Sell a Structured Settlement Annuity
- Sell Your Annuity
- Sell Your Life Contingent Structured Settlement Annuity Payments
- Sell Your Lottery Payments
- Should You Sell Your Structured Settlement Annuity?
