Disadvantages of Structured Settlements

Structured settlements are an agreement on settlement payments between a plaintiff (claimant) and a defendant where the plaintiff agrees to the dismissal of the case in exchange for a financial settlement to be paid by the defendant.

The defendant will direct a third party/assignee (usually an insurance company) to execute the annuities on its behalf and provides it with funds necessary to do so. The process of arriving at the amount of the settlement is through negotiations concerning the annuity value and payment schedule. The negotiation process will primarily be between the claimant and the life insurance company; if litigation is involved the defendant will also be present.

Disadvantages of Structured settlements:

1. Insufficient Cash: The periodic structured annuity payment made to the plaintiff may not be sufficient to cover medical emergencies or major life purchases such as a house, car, or business investment.
2. Slow and Lengthy Process: the process of closing the settlement case can be long typically ranging from 3-6 months and then an additional 1-2 months before you receive your first payment
3. Restrictive policies: it is very important that the defendant ensures that he fulfills all conditions of the annuity for the settlement duration. This is especially true when dealing with structured annuities with tax-free status.
4. Current Economy: It's no surprise that the current down trending economy and near collapse of major insurance giants like AIG is placing a lot of pressure on the structured settlement industry. Although, most insurance companies are supported by reinsurers. It pays to be extra careful in these times and really watch your investments closely.

Because of the aforementioned disadvantages of structured annuities, there are many plaintiffs who sell a portion or their entire annuity stream. With a reputable funding company, anyone may sell their structured settlement annuity for a lump sum cash payment today. For more information on how to sell structured settlement contact a professional advisor at Fairfield Funding today.

Fairfield Funding is a structured settlement company, engaged in purchasing structured settlement payments and lottery annuity payments. We provide lump sum cash for structured settlement and cash for lottery winnings.

Stefano Grossi
http://www.FairfieldFunding.com

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