Cash Settlement: Settling for Cold Cash

2007-03-08 10:33:40

( Financial )



IF MONEY IS BOUND TO A POLICY

There are many ways that one can avail of a cash settlement when cash is badly needed. You can get cash settlement in exchange for structured settlements, annuity settlements, or life insurance settlements, among others.

A cash settlement is a nice compromise that companies provide when your cash is tied or bound to a contract like a structured settlement or a life insurance. In these cases, there may be circumstances where you need cash right away but cannot get it.

Companies who deal with this type of business will buy your life insurance or structured settlement for an agreed value that is lower than the value of your policy or settlement. In turn for this type of cash settlement, the companies will then get sole ownership and rights to the policy, and from thereon will receive the payments as stipulated in the insurance or structured settlement terms.

TYPES OF CASH SETTLEMENT

When you opt for life insurance settlements before the insurance’s maturation, it will then be called a viatical settlement. In this type of cash settlement, a company will buy your life insurance at a price lower than the value of the policy, but higher than the premiums you have paid. A viatical settlement is practical when the insured has no legal beneficiaries. In this case, you as the insured are better off cashing out on the policy and making use of the money while still alive.

A structured settlement on the other hand is a deferred payment plan of a financial obligation that results from a lawsuit. If you are the complainant and have entered into a structured settlement, you will receive compensation for the damages you have incurred in the form of regular installments instead of a single lump sum. Often, complainants will agree to a structured settlement because it presents an equitable settlement that is acceptable to all parties involved.

A cash settlement in this case will involve a payout that is less than the total value indicated in the structured settlement. The company who bought the structured settlement will then be the recipient of the installment payments that you have been previously receiving.


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