After winning a court case or agreeing on a settlement, many insurance companies and other parties could agree to a structured settlement. As a part of this settlement, you would receive monthly payments for a set amount of time. Instead of waiting for the money every month, there are ways to sell the settlement and receive a lump sum of cash. If you are considering a structured settlement payout with the help of a company like http://www.mylumpsum.com, there are five surprising facts that will help you learn more about the process and your options.
With a structured settlement, the amount that you have is set for the duration. It doesn't grow any interest and the value will never change over time. This is why many people choose to cash out a structured settlement and use the lump sum for a different type of investment.
An IRA account offers the chance to save for retirement and build up investments over time. Percentage rates vary for these accounts, but it can help you increase over 15 to 20 years of savings. Even something as basic as a savings account can have a growth factor included in it.
When choosing a structured settlement payment, you can still keep a little structure intact. A partial payout of the settlement will give you a lump sum now and then the rest through payments in the future. For example, if you have a settlement for $400,000, you can get a lump sum payment of $200,000.
Once you receive the cash value for amount, you will set up payments for the second half of the settlement. This payment will likely occur at the point when the second half of your payment is supposed to start. It all depends on the company that you choose to set up the settlement with. This can help ensure that you have guaranteed money in the future.
Inflation Could Decrease Value
As you get monthly payments, the value that you receive will never change. One of the biggest factors in receiving this set amount is inflation. Technically, as you are paid out, the value of the money will decrease due to the inflation. By cashing out the money and putting it into other types of investments, the money value can increase instead of just staying the same.
Along with investments like savings accounts and IRA accounts, additional options include stocks or CDs. The rates in these accounts can help the money stay or rise above the inflation amounts.
Using a lump sum payment to help pay off debt can help save you money in the long run. When you have the option to choose more debt like a credit card or a cash option, the cash option has more long term benefits. You are not losing anything out of your pocket to get the cash. By using the cash, you can avoid late fees, interest rates, and additional costs of having high debt amounts.
Different Rates Available
Nothing is guaranteed when trying to plan a lump payout. There are different companies, percentage rates, and settlement amounts to consider. The best way to figure out how much you are going to get is by planning out all of the numbers. When you work with a company, you can get a list of rates based on different amounts to help figure out possible settlements.
Online resources like a structured settlement calculator can help you estimate the payments, possible cash outs, and different options using the settlement that you have left. It's important to know how much of your settlement is left before calculating the payout options. Even just missing a few months of your calculation can make a huge difference on the final payout you receive.
Consider all of these options and your money management skills when deciding what to do with the final lump payments that you receive.