You’re probably familiar with the television commercials inviting viewers to sell their structured settlements for “cash now.” Factoring companies like the ones you see on television purchase structured settlement annuities in exchange for lump sum cash payments. Recently, one of our team members noticed a new way that factoring companies are trying to reach your clients—through Craigslist ads.
Earlier this month, someone in Dayton, Ohio posted this ad on Craigslist:
Structured Settlement Cash (Dayton)
ANYONE WITH A FUTURE CASH FLOW
Anyone with a future cash flow due them,
with a strong payor that would like to get a lump-sum now,
call me or email me
Why wouldn’t your client want to sell their structured settlement?
Factoring companies know exactly who they are looking for—someone who is in desperate need of cash. Individuals who are injured or who have lost a loved one often have medical bills that pile up, a loss of income, and a costly adjustment to a new normal. In the short term, immediate cash may appear to “fix” those issues. However, there are many reasons why it’s better to leave a structured settlement annuity in place than it is to sell one. Here are two:
#1: The seller does not get paid the full value of the structured settlement: Factoring companies have one goal—to make money. Yes, they pay annuitants for the sale of their structured settlement annuities, but the lump sum payment is deeply discounted. The factoring company gets to enjoy the full value of the policy, and the annuitant is left with pennies on the dollar.
#2: The seller gives up the opportunity to enjoy financial security: Structured settlements are intended to be tools that provide long-term, predictable income. Selling the policy to a factoring company cuts away at the annuitant’s financial safety net. For some people, the structured settlement annuity may be the only financial safety net, making it even more important to keep the policy.
They key is to prevent the need to sell in the first place, and one of the best ways to do that is to work with an experienced settlement planner. A settlement planner can sit down with an injured claimant to review their unique financial needs and goals and can help ensure that the claimant is informed of all possible settlement options. A structured settlement annuity may be a great fit for an individual claimant, or it may not. It all depends on the claimant.
Contact us to learn more about structured settlements