Following are three main options to choose from when receiving an annuity payment:
1. Income for Life:
It guarantees you a set income for the duration of your life. However, payments will cease upon your death. It is a risky option as you don’t know exactly when you will die. If you die before your annuity, the complete amount will be completely paid out by the insurance company, and not your beneficiaries or nominees otherwise it will go to the remainder of the annuity funds.
2. Income for Life with a Guaranteed Period:
It is more appealing option than the income for life as it provides same coverage as the first option. In addition if you die before the predetermined guarantee period expires, your beneficiaries will continue to receive payments until the guarantee period ends.
3. The Joint and Survivor option:
The option guarantees payment to the insured and another person, usually a spouse, until both of them die.
As anyone knows unforeseen situations do come up that may require access to more cash than a person has in the bank. Usually a loan is taken out as mortgage on the home or unsecured debt in the form of credit cards etc. but, you can also take a loan against your structured settlement payments you receive as well.
ReplyDeleteIf you have access to a monthly income stream through a structured settlement, you can sell all or part of these payments to get a larger amount of money in a shorter time period.
Unfortunately, there are downsides to this type of arrangement that everyone should be aware of before pursuing this type of agreement.
1. There are many companies out there who will gladly pay you a lump sum to receive the monthly income stream. But the cost of getting your money early may be extreme. These companies will pay you a discounted rate for the purpose of making a lot of money over the life of the annuity.
2. Structured Settlements were designed to provide a way for an individual to manage their money and provide a consistent source of funds to pay bills and etc. Receiving a single amount of money can be an extreme temptation to blow the money on luxury items rather than what is was meant for.
3. Accepting a large amount of money through a settlement loan may trigger significant tax burden to the individual that received the money. This alone can be a reason to avoid a structured settlement loan.
Gravity Gardener
http://gravitygarden.com/my-structured-settlement/structured-settlement-payout.html