Structured settlement quotes and issues related to funding

Structured settlements are a great way to solve funding and financial issues during an injury due to accidents. Many people are aware of the tax benefits gained when you choose to go for a structured settlement rather than going for a lump sum settlement – the former will ensure a steady flow of income and regular payments which will prevent you from spending all your funds in one go. However, like any other investment and financial transaction, there can be many issues related to structured settlements. What are these issues and how can one solve them? This post will discuss the answers to these questions and will specifically target issues related to structured settlement quotes and funding.

The most common issues related to structured settlement quotes and funding of structured settlements are as follows:

  • Till when are structured settlement annuity quotes valid and favorable? How long should you be looking out for them?
    • It is a very common question and anyone who is looking for structured settlement quotes inquires about how long they are good for. There is no real and straightforward answer to this and the type of quote decides its validity and worth.There is a range of book rates and can be good for a variety of time periods.Some may be good for as long as 5 days while a daily rate may be good for 24 hours or even lesser.
    • In case you are looking for an offer on the basis of a quote which you received, it is very important that you check its expiration date. This is because one some quotes, the rates are subject to change. If the quote is based on a rated age then the rated age must be valid for the quote to be useful.In general, the rated ages which are considered good arebetween 6 to 12 months and this depends on individual structured annuity issuers. Every issuer offers a different rated age which is why it is important that you don’t generalize and confirm personally.
    • When it comes to rated ages, it is also possible that a pending quote might not be valid anymore. In these cases, you need to request that a renewal of the rated age is done. You can successfully get it done by providing your insurer with the required information for renewing the rated age of the quote.
  • What are the timing issues related to structured settlement quotes?
    • There are several factors which affect the timing of a structured settlement funding. These factors are:
      • The payer
      • The jurisdiction requirements related to the timing of funds
      • The business practice of the payer
      • The court approval related to the structured settlement quote
      • If the payeris a government body
      • If the payer has any type of insolvency scheme of arrangement
    • These are just some of the many factors which affect the timing of funds. There could be many other factors depending on what takes place between the two parties involved.
  • What is the purchase date of the quote?
    • The purchase date of the quote is the date on which the annuity issuer expects funding of the structured settlement. The cost of the annuity is directly affected by the how long you take to fund the annuity and if you fund it after the purchase date.
    • The cost of the quote will increase if you are not able to pay for it by this date. However, the interest rates could possibly remain the same as they are independent of how long you take to fund a given quote.

It is not a bad thing to take risks but one should be care about what kind of risks they are getting in. If you are a broker, you will be putting your client’s money at risk which can backfire if you do not carefully determine everything in advance. For instance, if you fail to anticipate and calculate the possible losses and something negative happens, the client will face unprecedented losses. Hence, it is important to estimate all the possible states you could end up in and keep your client updated and ready for the same. At the same time, it is also possible that an informed client may try to put the blame of a certain loss on the structured settlement broker. However, you should not be discouraged because a structured settlement broker has lock in privileges. Lock in privileges mean that the interest rates with a particular quote are locked in and the annuity issuers agree to this in return of fund on a certain purchase date.Lock in privileges are very useful in cases where court approval is necessary for certain structured settlements.

Structured settlement lock ins are commitments and should be seen in that light. Any annuity issuer who agrees to a lock in is actually securing investments which will balance any liability caused due to the responsibility of paying periodically. It is a very useful tool which when used at the right time will help you immensely. It is important to note that leaving the locked in interest rate for a higher rate can impact your relationship with your annuity issuer who may not grant lock ins in future.