Benefits of Purchasing Structured Settlement Annuities
Whenever an individual annuitant, who is receiving periodic payments under a Structured Settlement, desires to sell some or all of their future payments for a lump sum of money, the cash flows are sold at a discount in exchange for the lump sum payment. This discounted Structured Settlement is then available for sale to the Purchaser. This manner of securing the payment streams at a discount directly from the seller is how the Purchaser secures very favorable yields. This transaction is normally facilitated by a financial broker on behalf of the seller (or annuitant) and the purchaser.
These structured settlements normally earn more than two times the yearly rates of Municipal or Corporate Bonds, Bank Issued Certificates of Deposit (CD’s), or Government Issued Treasury Securities. Investors can certainly purchase an annuity directly from an insurance company, but these Direct Annuity Investments are backed by the same insurance companies as the Structured Settlements arranged by a broker, and they are typically originated with large sales charges or commissions, and offer substantially lower yields.
The major benefits of purchasing these structured settlement annuities are:
- Purchaser receives significantly higher yields than Purchaser can secure from comparable fixed rate investments.
- Purchaser receives a fixed income over a defined period of time, based on the specific parameters of the purchased Structured Settlement.
- Purchasers can aquire this asset to increase the yields in personal holdings, to maximize income at retirement, or to preserve principal for future years. They can be purchased by individuals, retirement plans, corporate entities, foundations, trusts, through investment clubs, or group investment accounts.
- The Structured Settlement is backed or supported by annuity contracts issued by a rated insurance carrier. The insurance carrier that issued the annuity contract is state regulated and will generally have a Standard & Poor’s credit rating between “A-” through “AAA”.
- Purchaser has control throughout the investment process; Purchaser receives assignment of the Structured Settlement payment rights directly from the seller through an approved court approval process, and the Purchaser receives the future cash flows directly from the rated insurance company that is obligated to make the payments. At no time during the lifecycle of the asset should the broker have possession, or control, of the Purchaser’s money.