How much is my structured settlement worth is probably the most common question that I have received over the last fifteen years of buying structured settlement payments. There are many factors that go into the value of the future structured settlement payments including the quality of the annuity provider making the payments, when the payments are due and costs of completing the transaction. Below we will walk through each and discuss how each of these factors affects the value of future structured settlement payments. If you would prefer, you may call one of our knowledgeable and friendly specialists at 1-877-919-8003 who are here to provide you the information you want in a no-obligation and no pressure consultation.
Can my structured settlement company determine how much is my structured settlement worth?
First, we should look at the annuity provider, sometimes referred to as the insurance company, that is making the payments on the structured settlement. The annuity provider can make a big impact when you try to decide how much is my structured settlement worth based upon their rating. Much like an individual, annuity or insurance companies have ratings and those rating are generally speaking based upon their ability to pay a debt. So if one of the annuity providers has a poor rating the future outlook for the company to pay the annuity is low or lower than other companies in the market and therefore the value of the future structured settlement payments may be less. As example, there are a few unfortunate structured settlement recipients who settled their case back in the 1980’s and received a structured settlement backed by, at the time, a strong insurance company named Executive Life Insurance Company of New York. Unfortunately, that company was unable to make good on their obligations and was placed into receivership in the early 1990’s. Basically this means the responsibilities to make payments under the structured settlements were placed into the hands of someone else due to the inability of this company to manage their obligation. Most of the companies that issue annuity policies for structured settlements have strong ratings and therefore provide for a strong value. The insurance companies that provide for strong value when selling structured settlement payments are the following in no particular order:
Allstate Life Insurance Genworth John Hancock Met Life New York Life Pacific Life Prudential Semetra Transamerica
Does the due dates of my payments determine how much my structured settlement is worth?
The next major factor in helping you determine how much is my structured settlement worth is determining when the payments are due. This is the most misunderstood of all the factors that affect the value. To help explain this let’s look at an example of buying a car. Let’s say that Johnny wants to finance the purchase of a twenty thousand dollar car. The dealership gives Johnny options for payback. Johnny could choose to payback each month for 3 years, 5 years or 7 years. In which case, generally speaking of course, would Johnny pay back more? That’s correct, Johnny would pay back more if he pays over 7 years instead of 3 or 5. So let’s look at a structured settlement.
Let’s say that Johnny receives five hundred per month for 20 years. Johnny is choosing between two options to sell his payments.
Option #1 is to sell $500.00 for 10 years beginning next month
Option #2 is to keep all of each monthly payment for 5 years and sell payments from year 5 through year 15.
Johnny is selling the same face value for 10 years. Which option will allow Johnny to receive the most cash today?That is right, the option to sell structured settlement payments of $500.00 starting next month.
The further the payments are out in the future the less the structured settlement worth would be today. So you may ask why would someone sell payments starting at any time other than next month? Very good question and there are numerous reasons for not choosing next month. For example, let’s say that Johnny uses the $500.00 per month now to pay for his books and living expenses while going to school, but needs to raise money to cover tuition. By selling the payments starting in 5 years he is able to raise the money for tuition today but not have to realize the impact until after graduation and into his career in which he will have a good income. Not only does the due date of the payments help you determine how much is my structured settlement worth, but so does the costs of the transaction.
Costs of the transaction – How do they determine what I get?
Finally, the last factor you need to review to determine how much is my structured settlement worth is the costs of completing the transaction. In 2002, the structured settlement protection act went into place. The act requires that in order to sell structured settlement payments to a third-party the transaction must follow certain guidelines. These guidelines are setup to protect each person who wants to sell payments. Our view is that the statute is one of the best things that could happen in this industry. It provides a level of comfort, protection, disclosure and oversight that is needed to ensure the best experience for each person selling their payments. Back to the point. One of the aspects of this act is the requirement for a court to approve the transaction in order to sell payments to a company like Mainstreet Funding. So the costs of the deal will include the cost of getting the court to approve the transaction. Also, there may be additional costs attributed to changing the direction of payments to a third-party. The reality is that transactional costs tend to be a part of any deal when you are selling an asset. Let’s say you want to buy a house, you may pay for an inspection, appraisal, attorney costs etc. This cost should not necessarily affect your decision, however you should know that this is part of the deal and should be understood before going forward.
There are many factors that can help you answer the question, what is my structured settlement worth including the annuity or insurance company rating, when the payments are due and also the costs of the transaction. Make sure you speak with one of our structured settlement representatives here at Mainstreet Funding at 1-877-919-8003 and we will be happy to walk you through these items so that you are completely comfortable in determine for yourself knowing what is my structured settlement worth.