Selling structured settlement payments hastily carries a certain risk of considerable loss. Occasionally though, when financial circumstances dictate the need, there may be no choice but to do so. If selling structured settlements cannot be avoided, be sure to do it the right way.
Things to Do Before Selling Structured Settlement Payments
The first thing you have to do is check the type of policy that you are holding. If it is a term life insurance settlement then this is obviously different to a life policy.
A life insurance policy is paid out to your beneficiaries upon your death. Some policies include a clause that dictates the conditions (if any) under which the policy can be cashed in. There are some life insurance policies that can be cashed in for the amount already paid in and no interest will be paid. So if you have paid your premiums for the past ten years, you will only get those payments back. There are also policies which will pay out pro-rata after so many years and are not just payable on your death.
It is important that you understand exactly what type of structured insurance settlement you are holding and wanting to sell. Insurance policies are not designed like a monetary deposit in a bank. Insurance policies are structured in such a way that every term and condition must be met with before any payments will be made. Any term or condition that is not met will cause the insurance policy to be forfeited (for instance, if you don’t pay your annual premiums) or if you haven’t held the policy for any (if specified) required time.
Very carefully read all the terms and conditions. Once you understand precisely what the requirements are of your policy you will then know whether you want to sell all your payments or just a portion. If you need clarification on any of the clauses then you would be well advised to seek out the services of a lawyer or an insurance investment adviser.
Selling structured settlement payments is better than applying for a loan because the cash you will receive is your own money. Chances are that the interest rate will be considerably higher for a credit card than that which you may be earning on your insurance policy but this is something that you need to check out to be sure.
