Frugalnomics

Even though a structured settlement annuity is almost always designed to meet the financial needs of the beneficiary of the case, there comes occasion that the fixed income is simply not sufficient. When such a need arises, the annuity’s beneficiary is left with a couple of options. Although the income from their annuity payments is not sufficient to cover the cost of their immediate expenses, they can make arrangements to sell their annuity to another interested party. Investors interested in a high yield annuity investment can purchase all or a portion of the income payments from a structured settlement investment.

In order for the beneficiary to be able to sale any of the annuity proceeds, they must first prove to the courts that their financial situation warrants such action. The original intent of a structured annuity settlement is to establish a stream of income that will provide for the anticipated financial needs of the case’s plaintiffs for their foreseeable future. This often involves setting up a fixed annuity contract that not only provides a solid monthly income, but is tied to the lifespan of the covered individual. The judge must determine that the immediate need is sufficient to warrant lessening the insured’s monthly income.

Once the court approves the sale of a portion (or all) of the annuity payments, the insurance company can reassign the stream of income to the investor. The investor will typically pay a lump sum of cash for the opportunity to receive the structured annuity payments. One of the primary benefits they receive is that they can buy an annuity contract at discount. The typical fees, commissions, and additional charges associated with a new annuity account are not present. Without this front load on the annuity, the contract can be much cheaper, providing better yields/ returns on the investment. The major difference with the investor and the original beneficiary is that they investor does not share the same tax-advantages as the original insured would.