These Are The 4 Best Structured Settlement Buyers
Jan. 18 2023, Published 4:12 p.m. ET
Individuals and families looking for extra cash might be in the market for structured settlement companies to purchase their annuity rights in exchange for a lump sum. However, the process of a structured settlement buyout, including shopping for one, is a lot to manage on your own.
To help in your search, The Source has put together reviews of the 4 best buyers and explain key terms and concepts annuity holders need to understand when considering a sale or transfer. Get a head start in your structured settlement buyout search and get the confidence you need to make an informed decision with the sources guide to selling your structured settlement for cash now.
Top Rated Structured Settlement Buyer:
Known for having the highest dollar offers of any secondary market company
Highest advance amount for settlement sellers
Best offer guarantee for lottery, annuity, and structured settlements
Buys Life Contingent and Guaranteed Payment Rights
Helps to confirm payment details with insurance company and ensures your best interest is met
So How Do Structured Settlements Work?
Structured settlements according to the research done by the team here at The Source refer to any kind of annuity contract where the benefactor receives a standard, reoccurring payment which is typically guaranteed over a specified period. Depending on the terms, the payment could be monthly, quarterly, annually, etc. These arrangements usually arise out of legal liabilities such as a personal injury or wrongful death claims that range from everything under the sun such as train accidents and deadly workplace injuries.
Structured settlements are a popular payment method in these situations because they allow the liable party to spread out the payment to the injured party over time and the payments come from their insurance policy. Companies that make the payments are household names like Berkshire Hathaway, Met Life, Prudential, Allstate, New York Life, and John Hancock Life Insurance. This lessens the short-term financial burden and helps the injured party receive payment faster compared to a lump-sum arrangement where it might take longer to obtain funding and settle the case according to one settlement planner that we spoke to out of Texas when reviewing the top companies in the industry of setting up, planning, buying, and selling structure settlement payment rights.
Additionally, the annuity-like format of a structured settlement removes some of the financial headaches that may come from receiving a large sum of cash such as investments and finding a financial advisor. Knowing that you have a set amount of funds coming in at pre-determined timeframes can make financial planning easier. Only if somebody decides they want to go to college, pay for medical bills, or purchase a house should they move forward with factoring their future periodic payments for a large lump sum of cash. If that is the case our list of best companies to work with will help you make an educated decision on who you should work with on the secondary market
Common Reasons for Selling Your Structured Settlement
The need to sell your structured settlement contract rights usually occurs when the periodic payments you receive are not sufficient to cover your financial obligations or needs. For example:
Making a large purchase (e.g., a car or house).
Starting a business.
Pursuing an investment.
- Repaying debts from credit cards or other personal loans that may have been necessary while waiting for your structured settlement offer.
What Do Structured Settlement Companies Do?
Buyers of structured settlements include financial institutions and other firms with the capital to provide a lump sum to sellers so they do not have to wait months, years, or decades to collect the full amount of their pending payments. By factoring you have the opportunity to trade in money that is a set amount paid over time for cash now and if you are able to invest even at nominal bonds at todays rate can be making over 8% a year return versus an amount that is typically much smaller.
The insurance companies are investing and playing with your money but shouldn’t you be the one who decides what to do with your own money?
The structured settlement buyers will usually offer less than the overall value of the annuity as a premium is charged for immediate access to funds via lump-sum payment. Each structured settlement company could have unique value propositions for sellers because of qualifying terms for your structured settlement and other benefits. In some cases, you can get an advance on your future sale and structure a buyout based on different years and lump sums in your policy.
Steps to Take When Finding a Structured Settlement Company
The company you entrust to purchase your payments and handle the transfer of your structured settlement policy is a decision that requires careful consideration because the rights to your settlement are likely one of your most valuable assets and this is a financial decision you should not take lightly.
There are a lot of bad actors and scammers in this world who provide bad financial advice and investing in something that is not in your best interest could be detrimental to your future. It’s important that you have good rapport with your analyst or structure settlement broker and trust them.
Before reviewing our list of top structured settlement companies, you may think about the following steps to take and key attributes of buyers to ensure your selection is in your best interest, financially and otherwise.
Get Professional Input Before Agreeing to a Structured Settlement Buyout
Naturally, the decision to sell your structured settlement rights should involve a thorough examination of:
The underlying reason(s) for the buyout (i.e., why do you want to sell your structured settlement?)
Your personal finances
The terms of the buyout
Having one or more professionals by your side during the process can further help you vet available options and make a choice on a buyer that meets your needs. Consider the guidance of a financial advisor, personal injury lawyer, a trusted attorney, or other firm experienced in legal matters and money management.
Get Familiar with the Structured Settlement Company’s Customer Service Offerings
The process for finalizing a structured settlement buyout can be lengthy and tedious because of the necessary paperwork involved. Knowing whom to contact from your structured settlement company and when can help prevent unnecessary processing delays and give you confidence that unexpected issues can be resolved as quickly as possible. When it comes to customer service, the following details may play a role in your decision:
Does the company appoint a representative to handle your buyout exclusively?
Are there multiple channels for communication? This may be important for individuals who need special accommodation or who have a preference between voice or text conversation.
- What are the company’s hours of availability? This may be especially crucial for people considering a structured settlement company in a different time zone. The companies we spoke to and ranked as the best offered customers help from Alaska to Virginia and out to Hawaiian time zones.
What Is the Company’s Court Denial Rate?
As mentioned in our discussion of customer service, structured settlement buyout services are highly regulated because of the financial stakes at issue. One of those regulations is that most states have enacted laws that protect plaintiffs and other beneficiaries with structured settlement rights from inequitable offers. A key component of these protection acts is that you must get a court’s approval before finalizing a buyout. Courts generally look to the following considerations when determining if the buyout offer is fair and made in good faith:
You had an opportunity for an attorney to review the terms with you.
Your need for the buyout.
The risk of experiencing financial hardship because of the deal (e.g., money management concerns).
In most cases, the court approval requirement is a formality but in rare cases can be a devastating blow to annuity holders who go through the process only to have a court force them to start over. Prospective sellers can get a reasonable expectation of their structured settlement company by reviewing their court denial rate, which reflects how often the court approves their buyout offers.
You Can Also Look at the Structured Settlement Company’s Purchase Volume
In addition to court denial rates, you may also consider a structured settlement company’s purchase number. A company with a significant number of purchases will generally have a high success rate. The number of unique purchases in conjunction with the purchase volume will provide an accurate representation of the company’s successes in processing settlement buyouts.
Consider How the Structured Settlement Company Funds Its Purchases
Structured settlement companies generally have two methods for sourcing the funds they use to purchase their rights to the annuity. One method is a direct-funded buyout, which is the simpler option of the two because the company possesses the money necessary to pay the lump sum without using another party. The benefit of this model as a seller is that processing is faster and may involve less paperwork. However, the onus is on the seller to find the company with the best terms.
Conversely, you may sell your structured settlement through a broker arrangement where the company you contract with is not the one who buys the rights to your annuity. Rather, the broker makes the payout contingent on their ability to find a buyer for the settlement rights. The benefit to the seller is that they do not have to search and compare the current settlement structure buyout market because the broker will do that job for them. Of course, the seller may pay for this benefit as the broker’s cut could eat into the payout amount.
What Else Impacts Your Payout Amount from a Structured Settlement Buyout?
Potential broker fees are not the only costs that can eat into the lump sum received from the buyout. Other expenses that could apply depending on the structured settlement company include:
Legal fees
Escrow charges
Courts costs like filing or recording fees
Advance Re-Payments
Notary and Travel Fees
A structured settlement can sometimes seem like a deal that is too good to be true — having a company willing to give up large quantiles of cash on the promise of small cash payments in the future. However, this simplified explanation does not consider the discount rate that most companies apply to the buyout offer. The discount rate is how the company calculates the amount it can offer to effectively turn a “profit” on the transaction. Standard rates can top out at 30% but be anywhere as low as 10%. Contact one of the buyers of settlement payments below and see how much you can get for your settlement.
Details on Current Structured Settlement Companies
1. District Settlement Finance
A structured settlement buyout company that accepts all forms of long-term payment rights in exchange for lump sum payments, including lawsuit settlements, annuities, and lottery payments. Located in Washington D.C., District Settlement Finance leverages a small team of professionals experienced in structured settlements, which provides a direct line for potential sellers to simplify the buyout process. Their professionals also work with sellers to help them find the best terms for their unique money situation. Part of this review may end with a recommendation for a partial buyout instead and according to retirement living and other industry publications they are the number 1 buyer for structured settlements because of the high dollar amount offered to annuity holders around the country.
Quotes are free and applicants can receive cash advances as soon as 48 hours after initial approval. Of course, they explain that the final payment of your lump sum could take approximately 45 days because of the court approval process. Once approved, District Settlement Finance can make payment via check or direct deposit. To get more information you can call 844-933-2377
2. CBC Settlement Funding
CBC Settlement Funding is a broker that helps people find the best buyer for their settlement contract rights for over ten years. In 2022, they did over $50 million in transactions. They have an A+ rating from the Better Business Bureau as well as a 5-star Google rating. Some of CBC’s highlighted attributes include:
24/7 customer service support
Free competitive quotes
Located close to J.G. Wentworth in Pennsylvania
The option to partially or fully buyout your settlement rights
Up to $10,000 as a cash advance within 24-72 hours of applying for a buyout
Not quite as high of a payout as the number 1 company in the industry according to clients we spoke to but a close second
3. DRB Capital
DRB Capital has a simple 4-step process for helping sellers get cash for their structured settlement rights:
A confidential discussion to understand your needs
A best-price guarantee
The DRB team handles the paperwork for completing the buyout and keeps sellers informed at every stage
They transfer the money to you once approved
DRB Capital is so certain of its process that they offer a $25,000 guarantee to sellers who sign a contract with them. This means that if all other terms of the contract are met, they agree to pay $25,000 even if the court does not approve the offer. Applicants can also receive $100 when they request a phone quote.
4. J.G. Wentworth
J.G. Wentworth is a popular choice in the structured settlement buyout business because of its longstanding history and involvement in other financial markets that began in 1991. Their buyouts generally take 60 to 90 days to complete given court approval requirements. The company boasts top ratings from the Better Business Bureau, Trust Pilot, and Consumer Affairs. They currently offer prospective sellers a $100 gift card as a reward for obtaining a free quote.
As part of the quote process, you must show proof that you receive annuity payments and have the right to sell them. Most can demonstrate these requirements through bank statements and a copy of the settlement agreement, which will state any rights of assignment or transfer.
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Frequently Asked Questions
These are some common questions about structured settlement buyouts.
What Happens When You Sell a Structured Settlement While Getting Divorced?
Divorce could affect your ability to sell structured settlement rights you own because the dissolution of marriage may impact ownership and the need to have your ex-wife or ex-husband sign off on. Resolution of the divorce, as well as the laws of the state where you live, may impact the rights to structured settlements, including the right to sell it. Consider meeting with a divorce lawyer to better understand potential issues or concerns with trying to sell a structured settlement.
Is It Possible to Cancel a Structured Settlement Buyout?
Cancellation rights may or may not exist concerning a structured settlement buyout depending on the terms of the agreement. Other laws may also affect your ability to void a previously agreed-to buyout of your structured settlement. Any cancellation where money has already changed hands would likely require a return of those proceeds to the structured settlement company and only if they would accept the rescinding of a transfer. In most cases you can cancel during a recission period and have an extended period of time between signing and the day you go to court for approval.
Do Taxes Apply to Structured Settlement Buyouts?
The original source of the structured settlement may impact how taxes may or may not apply to your buyout. For example, a settlement from lottery winnings may have tax consequences whereas a wrongful death settlement might not. Again, having a financial or tax advisor on your team will help you navigate these questions.
Final Points on Comparing Structured Settlement Companies
Structured settlement buyouts are major life decisions concerning large financial interests mixed with personal preferences. While the court approval requirement minimizes some of the risks of grossly unjust deals, sellers still need to be careful when making this massive life decision that will have deep financial impacts. Have a team in place to guide you and take the time to carefully review the offers of structured settlement companies to make a properly informed choice for your future
