Many times, those that own structured settlements want to sell their policy. The person buying the structured settlement often grabs this opportunity without much hesitation. These are popular because whomever is getting the settlement knows that they will be receiving payments for years to come.
In order for the deal to take place, there must be a seller and buyer. Since these dealings are heavily regulated, court acceptance is needed for the sale to take place. Selling in any other way is not legal.
During the petition phase, the fiscal need of the seller will be already cleared. The person that wants to buy the policy from the seller must be ethical, and this will be looked into before the deal can take place. There can be no hidden fees of any kind, and the seller must have a good reason for wanting to sell their policy. In addition, the buyer has to be an institution or person that the court finds acceptable.
These structured settlements are popular because they can be profitable for the seller and allow them to have money every month for many years. Also, since the settlements are awarded by a court of law, there are no taxes to be paid. When receiving money over a fixed time, there are no taxes, but with lump sum payments there are always taxes. When lawyers get their payments, they are always in fixed sums as well.
The court has to decide if the selling of the settlement will be of benefit to the person wishing to do so, and if they in fact have a legitimate reason for wanting to sell. This is how the settlement policy comes to be. Most of the time, when a decision is reached, the seller is given a lump sum payment, but other times, periodic payments can also be awarded. Periodic payments are often better for the recipient, since it can be a sure way to have income each month during the payment phase.
Planning is needed for the ROI to be worth it to the buyer. When the differences between the costs and income are ascertained, this will determine the actual ROI. With fixed incomes, it is beneficial to make sure all costs are kept as low as possible to obtain maximum ROI. The greatest opportunity to get the highest ROI is during the actual purchase if you can get a very low purchase price. This will usually happen if the seller is in a great hurry and needs the money badly, and is wiling to accept much less than the actual settlement is worth.