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Structured Settlement Brokers: What They Do And Why You Need One

Apr 25, 2008
Structured settlement brokers assist in the development and negotiation of structured settlements. This type of financial arrangement is used to compensate individuals who have been seriously injured and provide consistent income over a specific period of time. Structured settlements are also used to compensate individuals who have won lottery jackpots or awarded a large sum of money through a lawsuit.

The role of structured settlement brokers is to advise attorneys on the different types of annuity plans available to their clients or to assist in the sale of structured settlements. Brokers provide detailed descriptions of settlement offers, answer questions relating to the offers, and help negotiate the best deal for the client.

Each structured settlement is unique; however, the main focus is to address both the current and future financial needs of the injured party. The monetary amount of the settlement is based on many factors including current and projected economic conditions and life expectancy of the Claimant.

Most structured settlements include upfront cash for attorney fees and medical expenses, along with annuity payment for future medical care, mortgage payments or rent, retirement income, or educational funds for dependents.

When developing a proposal the structured settlement broker must first assess detailed information about the individual who will receive the funds. Brokers must review the Claimant's medical, credit and employment history and carefully analyze life care plans to ensure the individual is fully compensated for future medical and living expenses.

One of the first steps the structured settlement broker will take is to determine if the Claimant qualifies for a sub-standard age rating. Many factors are involved to determine the life expectancy of the injured party. These include smoking, alcohol consumption, heart disease, cancer, obesity, diabetes and other health issues.

Annuity payments are backed by life insurance companies. Insurance companies base their premiums on the level of risk. There are three ratings which include Preferred, Standard and Sub-standard. People with a sub-standard rating are oftentimes declined coverage. However, in the case of annuity payments a sub-standard rating may actually provide a better rate-of-return.

Structured settlement brokers have access to numerous life insurance companies and are able to shop around for the best annuity for the Claimant. Additionally, brokers can interact with Medicaid and Supplemental Security Income (SSI) if required, mediate negotiations and offer tax-planning and financial advice to the Claimant.

Annuity payments are not subject to income tax; however, investment proceeds are subject to taxation. Additionally, if annuity payments are payable to an estate they are subject to estate tax. Payments can be structured in any manner agreed upon by the parties involved. Annuity payments might be paid out monthly, semi-annually or annually; in equal installments or installments of varying amounts.

Once structured settlements are finalized they are no longer open for negotiation or change by either party. However, structured settlement payments can be sold for a lump sum cash payment. A structured settlement broker can assist with selling a portion or the whole settlement if the need arises.

When selling a structured settlement, it's important to work with a broker who does not have an exclusive arrangement with the buyer. Trustworthy brokers have access to numerous buyers and will work on the seller's behalf to obtain the best deal possible.

In order to obtain the best structured settlement arrangement, it's important to work with a broker who is registered with the Department of Justice and insured against errors and omissions. Conduct research online to ensure the broker has a clean track record and can be trusted with sensitive information.
About the Author
Simon Volkov is a private Note Investor who specializes in structured settlements and helps individuals who need to liquidate their assets. Learn more about buying and selling annuity payments at www.SimonVolkov.com.
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