The value of your settlement was determined by a number of factors - the amount of time you are to be paid, the severity of your situation, and the expected rate of inflation over the months or years you will be paid. The party that is paying you is purchasing an annuity, and the amount that they pay up to establish that annuity is but a fraction of the amount you will receive over time. That money is invested, and the interest it accrues over the years allow it to grow large enough that it might have a series of monthly or annual payments withdrawn.

Once you agree to accept a structured settlement, you cannot exchange it for a lump sum payment, nor may you use your settlement as collateral for a loan. What if you want to buy a home and pay cash, or you have some other unexpected large expense? 

Under certain circumstances, you may be able to sell your structured settlement. There are investors who are interested in purchasing structured settlements, lottery winnings, and other annuities. Perhaps you have been contacted by one of these agencies.

The laws regarding the sale of structured settlements vary from state to state, and there are Federal laws that affect their sale, as well. You will probably have to go to court to arrange the sale, and some insurance companies, who handle the annuities that fund structured settlements, will not assign them to a third party.

Even if you do decide that you would like to sell your structured settlement, be aware that the amount that you are likely to be offered for your payments will seem quite small.  If you take the amount of money you receive annually for your settlement and multiply it times the length of time you will be paid, you will come up with a total value for your settlement. Keep in mind, however, that your payments have been funded through the creation of an annuity that earns interest and grows over time. The value of your settlement in present-day dollars may be half of the total value or even less, depending on how the payments were calculated and structured.

Any party that offers to buy your annuity is interested in doing so for investment purposes. They wish to make money on the transaction, and for them, that profit will be spread over the long time that it takes to receive all of the payments that constitute the settlement. Once you combine the factors of time, interest, inflation, and the buying party’s profit, you will find that the offer made to you will seem quite small.

Still, you might be interested in accepting it, as the lump sum offered may allow you to take care of your present needs more readily than continuing to accept payments over time. Be aware that there may be tax considerations in selling your payments, and due to state laws and the policies of the insurance company that handles your annuity, it may not even be possible for you to sell your structured settlement.

If you decide to sell, discuss it with your attorney. You will need to go to court to facilitate the sale. You should also shop around, as different companies may offer widely different amounts for your settlement. Beware of scams; one of the reasons you’ll want an attorney is to make certain that you actually get paid for the transaction.

You might also wish to contact the National Structured Settlements Trade Association. The NSSTA is a trade association that deals specifically with these sorts of arrangements. They may be able to offer additional information regarding the specifics of selling.

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