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Why does a company want to buy my structured settlement?

Wednesday, 4 January 2012

Structured settlement companies that buy a structured settlement do so at a profit. The amount of lump sum received by an individual selling either a part or the complete settlement is not the same as the value of the structured settlements sold.

The money they earn is invested by these companies as per the best option available in their investment portfolios at that point in time. The profits are used to run the company, pay employees, and advertise. A financially healthy structured settlement company is a safer option for an individual as there is less chance of the company going bankrupt. Also, the market standing of such a company would allow it to offer the best rates to their clients, use their own money to pay the clients without having to take loans from a bank or take the services of a middleman. If they do take the services of a broker or a middleman, they will have to factor in the broker’s charges which are ultimately paid by the structured settlement owner. 

Companies are attracted toward structured settlements because it guarantees a safe cash flow and the transaction is not taxable. There are always individuals in need of quick cash who would like to swap their structured settlements for some quick cash. The work involved in purchasing a structured settlement is not much, the main effort lies in marketing and obtaining court approval in compliance with the prevalent state and federal laws.

The fact that structured settlements are guaranteed means that structured settlement companies can obtain debt at low interest rates and finance other ventures with that debt. For example, if a structured settlement company pays a lump sum of $200, 000, a pre-tax rate of return of 10% for a 20-year period would get $23,492 every year. 





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