Accidents happen in life. In the unfortunate event of an accident or injury, often times a structured settlement is awarded. If you’re interested in structured settlement financing, you’ve come to the right place. We’ll go over structured settlement loans, legal settlements, and how to access your cash.
Whether you need to pay off a bill or make a large purchase, sometimes, you need your money in a hurry. Here’s your go-to guide to understanding structured settlement financing and loans. Let’s get you access to your cash when you need it.
What Is a Structured Settlement?
A structured settlement is a legal payment awarded in a lump sum or periodic payment through an annuity. An annuity gives the plaintiff in a legal case financial security over a period of time. For more information regarding structured settlement funding, you’ll want to speak with a professional about the best option for you.
One of the perks of taking an annuity over a lump sum is that if you invest your structured settlement it will grow tax-free. You can use your settlement to pay off debt, pay medical bills, or cover living expenses.
Your structured settlement is received monthly or yearly depending on how it’s awarded. This money is given without a tax penalty. Your award amount isn’t considered income so you can’t use it to qualify for loans or mortgages as you would with traditional employment income.
This is where structured settlement financing comes into play. You can essentially sell a portion of your upcoming annuity payments in order to access the cash you need for an emergency, large purchase, or unforeseen event.
Reasons for a Structured Settlement
There are several reasons someone receives a structured settlement annuity. One of the most common is for a personal injury case. In this civil case, someone is injured or harmed, and a lawsuit is put in place against the person responsible. Money is awarded to pay for medical expenses and other costs associated with their injury.
If you get injured at work, workers’ compensation is another form of structured settlement annuity. If you get injured, you’re awarded a settlement to make up for the wages you aren’t able to make while you’re sick or recovering from an injury. This is to help the employee and their family pay for living expenses.
In a medical malpractice suit, plaintiffs are also given a settlement or annuity payment to cover medical expenses. In the event of malpractice, the hospital or insurance company will pay an annuity to the patient who suffered or their family.
If a loved one dies in a wrongful death, their family can sue for a structured settlement or annuity. If a spouse passes away and someone is responsible for a wrongful death, they are awarded a settlement to help them cover bills or living expenses.
How Structured Settlement Loans Work?
Let’s say you’ve taken a structured settlement. You’ve been receiving your annuity payments but you need access to your money for an emergency, large investment, or a down payment on a home. Without a structured settlement loan or financing, you’d have to wait and save your annuity payments over a long period of time until you saved enough for your goal.
With structured settlement financing, you’ll have access to a larger sum of your payments upfront. This means a lump sum of money for you to exchange for your future annuity payments. You can do this for all your payments or a portion, depending on your needs.
If you’re looking to make a $50,000 down payment on a home, for example, you’d take out $50,000 worth of financing against your structured settlement. Once you’ve paid back your financing, your structured settlement payments may resume as they did before. You’ll want to speak with your finance company regarding fees and expenses associated with this.
Why Use Structured Settlement Financing
Structured settlements are used for any number of emergencies, bills, or expenses. If you need more access to future payments, structured settlement financing may make sense. You can essentially have access to cash to use how you need it.
A few examples of how to use your structured settlement include paying off debt, paying for medical bills, paying credit cards, making home improvements, auto repairs, and household emergencies. A structured settlement loan or financing helps you get access to more of your future payments in a lump sum.
There’s no need to wait for your structured settlement payments. Instead, you’ll get your money sooner for anything you need. You’ll want to keep in mind that you can’t use your structured settlement as collateral.
A structured settlement isn’t considered income. It’s an award for something likely tragic or harmful that happened to you or a family member. You won’t be able to borrow against it traditionally or use it to secure a home loan or an auto loan.
Structured Settlement Financing 101
A structured settlement doesn’t have to be forever. If you’ve taken an annuity and you need your money sooner, you’re not alone. There are options available to access your cash through structured settlement financing.
If you need your money to pay for expenses, investments, or emergencies, structured settlement financing can help you pay for what you need. You’ll get your money sooner and cover your expenses. For more money and financial resources and tips, head to our finance section.
