Structured settlements arise from the settlement of lawsuits. It is usually where companies settle a case out of court and a lump sum is paid to the defendant as a result of defective medication or products, injury, accident, malpractice in the medical profession to name a few. These settlements can work out to be a large sum and in most cases the monies are paid via a fixed sum on a timely basis. The basis can be monthly, semi-annual or yearly or whatever is decided upon by the two parties involved. Another reason for these structured settlements is because in many cases, the individual or parties involved are unable to work or maintain the expected standard of income that would have been enjoyed prior. These amounts when paid over a period of time will equate to the affected individual receiving more money, since interest accumulates on the unpaid portion at any given time.

There are companies that purchase settlements from individuals. This benefits the

settlement owner if a lump sum of money is what is needed at that point in time. It may be required for a meaningful purchase such as real estate and education; however it is always important to weigh very carefully the benefits derived from the lump sum payment and the long term installments received on a timely basis.

In order to purchase or invest in these settlements, the transaction has to be profitable or lucrative to the purchaser. There is usually a fee to be charged, which will be calculated as a percentage of the settlement. The long term investment and therefore the long term interest to be derived from the purchase is another benefit derived. In many cases, dependent on the state in which the settlement resides, approval by the court is required to purchase structured settlements. This is to determine that any purchase of structured settlements is done in good faith and that the settlement holder is not taken advantage of in any way by the purchaser. It also serves to ensure that the settlement holder is in fact making a correct decision and not selling blindly without thinking of the future.

When attempts are made to purchase these settlements the settlement holder can agree to sell part of the structured settlement. In this way the holder not only benefits from receiving a lump sum from the sale, but continues to receive some of the pre-determined payments on a timely basis.

The purchase of structured settlements requires a lot of thought between the both parties involved. The purchaser does not want to enter into this transaction if the company paying the structured settlement is not sound or profitable. The seller does not want to venture into a frivolous sale which cannot benefit in the long term and compensate for the loss of the structured payments. These are just some of the concerns that need to be addressed when discussions are taking place to purchase structured settlements.

Reasons To Purchase Structured Settlements

We all have heard about structured settlements, but we aren't fully aware from it. Basically, structured settlements are monthly installments of a certain amount, which is to be paid to the petitioner by the respondent for his/her loss or damage, caused by the actions of respondent. The judgment is passed by the honorable Court after the completion of trial and if the company or individual, who is responsible to pay the sum ordered by the honorable Court is not able to pay it on lump sum basis, then there is a provision in law that allows the respondent to pay the amount in installments. These installments are known as structured settlements. People, who are entitled to get these installments of structured settlements, usually prefer to sell their structured settlements to get the entire amount at once. There are countless benefits of purchasing structured settlements. Some of them are mentioned below:

1. SECURE INCOME

Well there are many benefits for investors in buying the structured settlements. First of all if you are investing an amount, you will get sound payments for an agreed time period, without any hitches or hiccups. Moreover, the profit over your investment will be hefty enough to meet your income needs. Excluding the other risk parameters, it is the best way to earn a hefty profit every month without moving an inch.

2. FREE FROM TAXES

Mostly these settlements are tax free and that is the biggest catch for investors. From investors' point of view, you will save the entire amount that you would be paying in taxes if you would have invested your amount on something else. Therefore, from this aspect, it is also quite beneficial for investors.

3. PREFER PURCHASING, WHEN THE ECONOMY IS DOWN:

Try to purchase these settlements, when there is a downfall on economy. In these circumstances, people usually sell there assets on bargain rates, just to get some amount. Therefore, it is considered as the right time to purchase settlements on bargain rates.

4. POINT OUT YOUR BENEFITS IN THE AGREEMENT:

Draft your agreement wisely. Just write down those clauses, which will be beneficial for you. Ensure your safety and benefits after the rights of settlements are transferred on your name.

5. FORECAST FUTURE INTEREST RATES:

Forecast the upcoming interest rates. If you see that there will be decrease in the interest rates, then it is certainly the right time to purchase settlements. As much decrease there will be as much benefited you will become.

There are many more reasons to purchase settlements, but all you need is a foolproof policy and vigilance to get the best deal.