STRUCTURED ANNUITIES: BENEFITS AND DOWNSIDES

2007-03-08 10:33:40

( Financial )



Annuities that are structured to pay you a settlement at regular periods are considered helpful inclusion in your financial plans. Comprehensive financial plan can include a combination of upfront cash settlement, long term investment and structured annuities. Structured annuities can provide you with regular income in the future. It is particularly beneficial if you are on your retirement age already.

Planning on how structured your settlement will be depends on how much finances you will need in the future. Determining your debt payments might help you plan the structuring of your settlement annuities. You can also verify what investment tool in the market you can put the cash you got from your settlement. You must choose an investment tool that can provide you with immediate cash when u needs it in the future. In other words, you must consider the liquidity of the investment.

Advantages of Structured Annuities

Structured annuities offer you a guaranteed income for a lifetime. Also, it provides a tax free benefit for all the payments incurred by a structured settlement annuity. The income that you will further earn from investing the original amount of the settlement will not be taxed. It also prevents you from using the fund for any purpose and risk of dwindling it since it is put in a secured fund and will only be disbursed to you at the agreed period.

Downside to Structured Annuities

The lack of flexibility on structured annuities is its potential downside. You have no choice but to wait for the annuity payment to fall due. Also, you cannot add other beneficiaries to the settlement agreement like your husband or children without acquiring a court order.

Sell Structured Settlement

You have the option to sell your structured settlement if you wish not to wait to receive the periodic payments. There are companies who are willing to purchase your structured settlement payments. They usually pay you lump sum cash.

Deciding to sell your structured settlement must be pondered carefully. Selling it would mean you are foregoing the income that you will receive in the future.


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