As an amateur investor/advisor I’m always looking at the pros and cons of each type of investment. Today, I want to give you my thoughts on variable annuities. Before we get started, let me assure that you know the difference. Fixed annuities are tied to interest rates or indexed annuities tied to various indexes and variable are tied to the investment performance of the mutual funds within the policy. That means you COULD make much more but then again, you could make much less too!

The Pros:

1. Flexibility investment choices – Variable annuities have sub-accounts with various mutual funds to select from. This makes it easy to change investment direction or your allocations with little or no costs.

2. Tax deferral for your investment gains – Just like your 401k or IRA, in variable annuities your contributions and earnings can grow tax-deferred until you withdraw funds. If this is in a non-qualified account (non IRA or retirement), you do not have to make mandatory withdrawals at age 70 1/2.

3. Income for life – I will concede that no other investment allows for the creation of income for life. Once you select monthly payments (or annuitize) your annuity contract, the insurance company will guarantee you (and your spouse, should you desire) the income payment for the rest of your life. This is like creating your very own pension! Gotta love that variable annuities pro!

The Cons

1. Irreversible consequences. The idea of income for life sounds enticing but here are a few cons. For example, once you invest in your variable annuity it often becomes irreversible. You often give up the ability to get your lump sum back or even pass it to “other beneficiaries”. So, choose wisely!

2. Locked up until 59 1/2. Another downside is that once you put funds into an variable annuity you cannot touch those funds until you reach age 59.5. Otherwise you have to pay a 10% penalty for early withdrawals. Yuck!

3. Poor tax planning. A withdrawal from a variable annuity is treated as ordinary income rather than qualifying for the often more favorable long-term capital gains treatment. When you do start to take funds from the contract, the portion of your payments that are considered investment gains are taxed at your ordinary income tax rate instead of the long-term capital rates. This rate could be higher than the current capital gains rate.

There you have it, variable annuities have both pros and cons and you need to talk to a professional to find out what is right for your situation. In fact, it’s better to get options from MULTIPLE professionals to compare rates and programs. That is why I’ve teamed up with a private company that seeks out the best quotes and gives them to you – free of charge. I hope you give it a try!

When both the lawyer of the defendant and the lawyer of the complainant know how a certain lawsuit will turn out, they strongly recommend their clients to have an agreement outside of the court. Most of the time, it is the lawyer of the defendant who initiates the discussion of this agreement. This is because he knows very well that his client will either face bankruptcy or a huge one-time expense once the ruling of the court is released. The discussion almost always ends up with an agreement such that the lawsuit becomes dismissed if the defendant agrees to periodically pay a certain amount of money to the complainant until a declared amount is reached. This agreement is called structured settlement. However, there are times when the complainant wishes to obtain the total amount of money declared on the agreement in just one strike. This one-time big money payment is also known as structured settlement lump sum.

There are several reasons why a complainant (known as the “claimant,” once the settlement has been agreed) will want to obtain the structured settlement lump sum. One is because of an emergency expense that requires immediate payment of a huge sum, such as an immediate medical treatment. Another reason could be that the claimant wants to immediately pay a debt, such as a loan on a car, because the interest that it may procure over time is larger than the total value of the structured settlement. It could also be that an immediate purchase has to be done, or that the claimant sees an investment that will give greater returns than the total value of the settlement.

Whatever the reason could be, a claimant who wishes to obtain a structured settlement lump sum should not expect to obtain a sum of money that is equal or greater than the total value of his settlement. This is because in order to obtain the lump sum, there should be a buyer for the settlement. In order for a claimant to have a structured settlement lump sum, he has to sell his settlement to prospect buyer. The buyers of a settlement will always seek minimize the price that he has to pay for the settlement in order for him to maximize his profit, while the sellers will always seek to sell his settlement on the highest possible price. A negotiation on this matter will keep on going, until the transaction of transferring the structured settlement is agreed upon by both parties.

Structured settlements arise from the settlement of lawsuits. It is usually where companies settle a case out of court and a lump sum is paid to the defendant as a result of defective medication or products, injury, accident, malpractice in the medical profession to name a few. These settlements can work out to be a large sum and in most cases the monies are paid via a fixed sum on a timely basis. The basis can be monthly, semi-annual or yearly or whatever is decided upon by the two parties involved. Another reason for these structured settlements is because in many cases, the individual or parties involved are unable to work or maintain the expected standard of income that would have been enjoyed prior. These amounts when paid over a period of time will equate to the affected individual receiving more money, since interest accumulates on the unpaid portion at any given time.

There are companies that purchase settlements from individuals. This benefits the settlement owner if a lump sum of money is what is needed at that point in time. It may be required for a meaningful purchase such as real estate and education; however it is always important to weigh very carefully the benefits derived from the lump sum payment and the long term installments received on a timely basis.

In order to purchase or invest in these settlements, the transaction has to be profitable or lucrative to the purchaser. There is usually a fee to be charged, which will be calculated as a percentage of the settlement. The long term investment and therefore the long term interest to be derived from the purchase is another benefit derived. In many cases, dependent on the state in which the settlement resides, approval by the court is required to purchase structured settlements. This is to determine that any purchase of structured settlements is done in good faith and that the settlement holder is not taken advantage of in any way by the purchaser. It also serves to ensure that the settlement holder is in fact making a correct decision and not selling blindly without thinking of the future.

When attempts are made to purchase these settlements the settlement holder can agree to sell part of the structured settlement. In this way the holder not only benefits from receiving a lump sum from the sale, but continues to receive some of the pre-determined payments on a timely basis.

The purchase of structured settlements requires a lot of thought between the both parties involved. The purchaser does not want to enter into this transaction if the company paying the structured settlement is not sound or profitable. The seller does not want to venture into a frivolous sale which cannot benefit in the long term and compensate for the loss of the structured payments. These are just some of the concerns that need to be addressed when discussions are taking place to purchase structured settlements.

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Taking structured settlement payments after all the legalities have been put in order sometimes turns out to be the wrong decision. Insurance companies often prefer this method, so that they don’t have to shell out a lot of money all at once. It might start off as a decision that seems like it might work, but there are times when a lump sum of cash is needed. There are two types of structured settlement buyout options; partial buyout or full buyout.

Partial Buyout: Selling only a portion of your structured settlement payments will provide you with some instant cash, but keep the rest of your payments coming on a monthly basis. Sometimes a little extra money is needed to help make ends meet each day. Reasons for taking a partial buyout option might include adding money to an investment portfolio, in order to strengthen it, or it might be to supplement lost wages.

People who have suddenly lost their job might opt for a partial buyout, in hopes that this money will tie them over until another job comes along. This income of additional finds might be just what is needed to get a family over a slight financial hump.

Full Buyout: While it might have been easier to take a lump sum in the beginning, instead of turning it down for the payment plan, sometimes a lump sum isn’t even offered by the insurance company. If this is the case, then the full buyout option is one way around this dilemma. People who are needed money from their settlement to be in their hands as soon as possible benefit greatly from this payment option.

Having kids of college age requires quite a bit of money, of which can be gained from a full buyout. Other reasons for taking the full payment amount include; job loss, buying a new home, paying off debt, purchasing a car, making mortgage payments, remodeling a home, investment opportunities, or miscellaneous high priced purchases. There are times when money just can’t wait, especially in the event of an emergency.

Structured settlement buyout options are available to people who don’t wish to wait another month for their next payment to arrive. Companies that perform buyouts make a profit as well, since these are non-taxable transactions. You can easily get quotes from a few different companies to see which one will offer you the most for your structured settlement payments. Be sure to ask plenty of questions and choose a reputable company to work with.

Are you currently suffering from an illness or major injury, due to the negligence of another person? The person responsible for your distress now needs to pay you some amount of money to compensate for your discomfort and medical expenses.

It is not easy to tell them on the top of your head as to how much you feel the settlement should be.

Thankfully, you can go on the internet and make use of a structured settlement calculator, which will work out how much you ought to collect.

If you go on the internet and search a bit, you will find a great calculator. You do not need a few degrees in order to make use of this calculator, as designers of this item thought about the fact that every person should be able to use it without having any difficulties.

In fact, this is probably the easiest thing on the internet to use.

The calculator will work out what the amount is you need to collect, how many years it will take in which you can look forward to the monthly installments and even the interest you can get from the settlement. This really is a very good application for you to use, to ensure that you to, not pull on the shortest end of the stick.

Do not make the mistake and sign on the papers they give you before considering all the factors involved and reading it very carefully. You should also not allow anyone in pressuring you into making an immediate and most probably a wrong decision. This is something, which will affect the rest of your life, so think of your future first before you accept any settlement.

Once you and the party paying you are complete and you all agree on a settlement amount, you will not be able to go back and make any changes.

You should now understand how important it is that you consider absolutely everything. Think about what will happen to your family you might not be able to work again. Where will you get money from to support them and your possible future medical bills? The structured settlement calculator will assist you in working this entire amount out, without any hassles. If you are currently in a situation where you do not know what to do anymore, start by using this calculator and contact an attorney to give you guidance.

In the financial world, the name of the game for prestige is designations. The letters after an advisor’s or consultant’s name says a lot about their background, training, expertise, and professional focus. Popular designations such as the CFP (Certified Financial Planner) or the ChFC (Chartered Financial Professional) are often readily recognized by the general population. When you get into the more obscure designations, the origin and meaning of the credential becomes somewhat obscure, and is only really understood amongst professionals. One such designation in the financial world is the CSSC or Certified Structured Settlement Consultant.

Spelling out the acronym CSSC goes a long ways in explained what the designation actually covers. Anytime that a field of practice becomes inundated with new faces looking to capitalize on the market, the seasoned veterans of that area of interest are going to look for ways to not only distinguish themselves from the crowd, but to assist the general population in weeding out the inexperienced or unknowledgeable consultants.

Those not dedicated to their field of study or those just looking to do the bare minimum for a paycheck will rarely commit themselves to the additional cost and educational requirements of a professional designation. To receive the CSSC, the applicant must not only have at least two full-time working years in the industry, but they must also enroll in a 4-day classroom and coursework structure with a comprehensive exam at the end of the training.

The Certified Structured Settlement Consultant program is offered through the National Structured Settlements Trade Association in conjunction with the University of Notre Dame. The cost of the program is in the range of $3000 – $5000 per applicant, minus the cost of books. The program attempts to educate consultants in different areas pertaining to structured settlements, including Medicare, settlement planning, fixed annuities, claims, tort law, and a number of other applicable topics.

A combination of the cost of the program, the time requirement, and the effort needed to get the designation have narrowed the field of candidates in the structured settlement arena. An advisor with this designation may not be more qualified than other professionals, but you know that they are dedicated to their profession and have taken the necessary effort to remain abreast of the industry’s knowledge. Whichever advisor you choose to go with, it is important that you are able to establish a relationship of trust with them. A designation is not a substitute for trust.

In recent years, structured settlements have become increasingly popular, but what are they? What are the pros and cons of such agreement? What are the alternatives?

A structured settlement is money awarded by the courts as a result of a lawsuit. The payments are paid over a fixed period of time or over the recipient’s lifetime. Some settlements may include a portion of the money to be paid as a lump sum payment, while others only offer periodic payments.

Structured settlements are often awarded to:

People with temporary or permanent disabilitiesGuardianship cases involving minors or persons found to be incompetent and workers compensation casesWrongful death cases where the survivors need monthly or annual incomeSevere injury with long-term needs for medical care, living expenses and family support

For over 20 years, the federal government has been encouraging the use of structured settlements. Originally used to pay out large settlements in tragic cases, they are now being used to fund cases as small as $5,000. In 1982, a bipartisan coalition of legislators in Congress came together to pass legislation that amended the federal tax code. This is known as The Periodic Payment Settlement Act of 1982 (Public Law 97-473).

Under The Periodic Payment Settlement Act of 1982 (P.L. No. 97-473), are specific tax rules to encourage the use of structured settlements to resolve physical injury cases. Section 104(a)(2) of the Internal Revenue Code, offers tax advantages to the plaintiff by guaranteeing that the full amount of the structured settlement payments is tax-free to the victim. On the contrary, the investment earnings on a lump sum payment are usually fully taxable. This piece of legislation was enacted to protect the rights of the annuitant.

Some people feel financially trapped by the periodic payments. Their financial needs have changed and they find the inflexibility of a structured settlement restrictive. Having a lump sum of cash would provide them with the financial freedom they desire. For these individuals, a structured settlement transfer, also known as selling payments, is a great option. An individual can sell their future annuity payments to a third party, in exchange of a lump sum. The individual receives a lump sum of cash to be used as they desire. Some individuals use the lump sum to avoid foreclosure, put a down payment on a home, continue their education or purchase a car; while others may chose to invest the money themselves to maximize their return.

Selling annuity payments for a lump sum is very common and the process is easy and hassle-free. In order to protect the rights of the annuitant in these cases, forty-six states and the federal government have enacted additional consumer protection statutes that establish strict conditions for these transactions. Under the federal law, court oversight and approval is required for individuals who chose to sell payments from a structured settlement to a third-party company. The details of the statues vary by state but the courts approval is necessary to protect the annuitant and to ensure that the annuitant is receiving a fair amount for their payments.

Annuity owners should feel confident that they are protected by the law. Annuity owners should also feel assured that they can have immediate access to their annuity payments through the option of selling them for cash today.

Structured settlements are a form of payment that is awarded in lawsuits and lottery winnings. Courts usually award such thing as a payout for the judgment reimbursements. With lottery winnings, structured settlements are usually chosen by the winner because the long-term payout is larger than the lump sum option.

Unfortunately, many people who receive the money often find themselves in an unexpected financial bind. Things like car repairs and medical emergencies don’t wait for you to have the funds available. In these situations, and others, you can turn to structured settlement loans.

These loans use the payouts of the structured settlement as collateral for a loan; you get the loan and they are used to repay the loan. You get a lump sum payment to use as needed. When you’re shopping around for the best places to get loans, there are a few key things to keep in mind.

First, not just any business can give out such loans. Financial institutions are the only companies that can provide these loans. These companies can include banks, but generally they will specialize only in these types of loans.

You must also seriously weigh the pros and cons. Structured settlement payments do not count as taxable income, but lump sum payments do; you will be responsible for the tax liability of structured settlement loans. Also consider the long-term consequences; if you sell your settlement, you don’t have that guaranteed financial assistance.

You should also consider the amount of the loan. Many people do not know that they do not have to lose the entire level of payments they would receive. It is possible to get loans using only a portion of the payouts. This gives you the benefits of both; you get the lump sum you need as part of your payout and then you can continue to receive payments when the loan is repaid.

Regardless of why you need the lump sum of money, you should always pay close attention and be knowledgeable about the process. Check the credentials of the lending institutions that you are considering. Have a lawyer examine the loan contract papers before you sign anything so that you understand what the terms, conditions, and interest is for the loan. Familiarize yourself with current values for interest rates to ensure that you aren’t getting charged outrageously high rates. Always look for possible hidden fees and costs that weren’t discussed during the initial loan negotiating.

Structured Payment or the periodic payments was first utilized in Canada and the United States in the early 1970′s that serve as an alternative to lump sum settlement. This system has now become a part of several common law countries including Australia, Canada, England, and United States. Although there are a lot of similar rules, standards, and definitions exist, each of these countries has its own rules, standards, and definition as well.

What are the benefits and advantages of getting this process? One, it could be tax-free, depending on the trial and approval of the court. It means that you may be able to get the full amount that you are expecting. Second, you will have a guaranteed and assured financial support for a long period of time which you can use to cover some financial obligation that you have. Third, it will help protect you from yourself – for some people who do not know how to handle money. There will be instances that if you are in this situation, of course your relatives will also want to share with the wealth that you have which most of the time it is hard to say no. Fourth, it will teach you how to budget the money that you have until the time of the next payment arrives. Fifth, those people who have some long-term medical issues and disabilities maintenance. This can rally serve as a great long-term support.

Those mentioned above are just the common benefits that you can avail in structured settlement payment. There can still be more if you properly understand how this system work and benefit a person. Remember that it was implemented for an alternative to lump sum settlement because of the fact that many people had already figured out that lump sum settlement does not benefit them at all in the later part. Lump sum is good if something like an accident or you need immediate amount of money and you were left with no choice. That would be very understandable.

So, look at the brighter side of this system of settlement. It really covers a lot of advantages compared to lump sum settlement. Lump sum is also good if you know what to do with the money you have or you have very profitable plans in the future. Most people are being discouraged to get a lump sum settlement because you are the one who will lose at the end part.

Structured settlement lump sum payment is something that is becoming more and more common in this litigious society. The use of a structured payment often arises when the defendant simply doesn’t have the money required to pay off the settlement. The structured payment system allows the defendant to pay off the settlement over time thereby avoiding bankruptcy or financial upset.

A structured settlement is usually arranged by the two lawyers when the outcome of a case is fairly certain and there is no need to continue the court sessions. A settlement can then be arranged that the defendant can afford and is able to pay. A structured settlement can be advantageous also to the plaintiff.

A structured settlement instead of a large lump sum will allow the person receiving it to have a steady income for a specified amount of time. This can be helpful, especially when the person receiving the money is not savvy in the ways of investing large sums of money and could become prey to poor investments or to being taken advantage of. A regular amount of money coming in over time will help with meeting bills and keeping things on a regular basis.

Many structured payments coming from insurance companies are set up in the form of annuities where the payments that one receives are from the interest earned. When dealing with an insurance annuity there are several things to take into consideration. One is that the insurance company may receive a rebate on the purchase of the annuity. If this ends up being the case, the rebate can be assigned to go to the person receiving the annuity.

Some insurance companies will try to overstate the value of the annuity to make it appear to have more value than it does. Checking out the value will be an important step in accepting an annuity. Many annuities do not have as high a rate of return as other forms of investment, but they may be a safer form of investment if you are not money savvy and able to prudently manage large investments.

Another thing to think about when accepting a structured settlement is the cost that may be involved to turn it into a lump sum. A lump sum payment may be advantageous if you are making a large purchase such as a house. There are ways to change the structured payment into a lump sum, but this should be done through a dealer who does so on a large scale. Take time to do the research to determine who will give you the best deal.

Structured settlement lump sum payment–the choice should be the type that will be best for you. Make sure that you have it drawn up by a lawyer who is familiar with that type of settlement. Take your time and make sure that you are doing what is in your best interest.