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The Amount of Money You Receive Should You Sell Structured Settlement Annuity Payments Depends Upon the Following Factors
The dates your structured settlement annuity payments are due
The amount of your structured settlement annuity payments
The rating of the insurance company that issues your annuity
The discount rate being charged for you to sell structured settlement annuity payments
Dates Structured Settlement Annuity Payments are Due
The date that your structured settlement annuity payments are due is the most important factor to consider when you sell structured settlement annuity payments. The closer your payments are to today’s date the more money they are worth. Conversely, the further away they are due the less they are worth. For example, a lump sum payment due in the year 2017 is always going to be worth more than that same payment due 2025. It’s a simple concept really. The further away a payment is due, the less money it is worth today. Think about it. If you had two choices for 1 million dollars what would you choose? 1 million dollars that will be paid to you tomorrow or 1 million dollars cash that will be paid to you in 25 years?
Well if you’re like most people you would have chosen the million dollar cash payout tomorrow. Wouldn’t that be nice! Quite simply the earlier an annuity payment is due the more value it will have. This is why when you sell structured settlement payments you will often hear talk of Present Value or Time Value of Money. Remember when your parents or grandparents would tell you that a candy bar cost a nickel? Well that was true and that also is a major reason why money in the future is never as valuable as money now. That part of it is called inflation. In fact, some annuities that are paid out as a result of a structured settlement will have a 3% or even 5% annual cost of living increase called a Cost of Living Adjustment or COLA for short in order to account for the cost of inflation.
Amount of Structured Settlement Annuity Payment
Keep in mind that when you sell structured settlement annuity payments you are also dealing with current market value. In other words how much is a particular structured settlement funding company willing to pay you to buy your future annuity payments. This changes depending upon certain current economic factors. The amount of your payment will of course also determine how much money you’ll receive. The bigger the payment, the more money you will get. Monthly payments are a little trickier. If you sell monthly structured settlement annuity payments, the amount of money you receive is still based on present value. The first monthly payment you sell will always be worth the most. The last monthly payment you sell will always be worth the least. Therefore if you sell 10 years of annuity payments from October of 2017 through September of 2027, the first payment in October of 2017 will give you the best return and the last payment in September of 2027 will give you the least return. Everything in between is basically prorated.
The Rating of the Insurance Company that Issues the Structured Settlement Annuity
The insurance company that issues your structured settlement annuity is also an important factor in determining how much your structured settlement annuity is worth. Each company is issued a “strength” rating in regards to the overall health of the company and their ability to meet their fiscal obligations. They are issued ratings by a few different agencies. The agencies that rate insurance companies are as follows:
Go ahead and check out your annuity issuer’s rating. If they are “A” or “A-” rated then you have nothing to worry about. At last check these sites required that you create a free account in order to check the latest ratings. In any event these companies rate the insurance issuer’s ability to pay and overall financial strength. There are some structured settlement factoring companies that will not do transactions with companies that are not rated highly. There is one notable company that has even gone bankrupt or are in what’s called receivership. Receivership is a form of bankruptcy in which a company can avoid liquidation by reorganizing with the help of a court-appointed trustee. Almost nobody will do a transaction with a company that is in receivership as there is a likelihood they will not be paid when your future payment becomes due. Think of these ratings similar to people’s credit reports. It’s basically the same thing, just on a different scale. It’s all about risk and the purchasers of structured settlement annuities want to know how much risk is involved before you sell structured settlement payments to them.
Discount Rate Being Charged on Structured Settlement Annuity Transfer
The interest rate or discount rate being charged when you sell structured settlement annuity payments is extremely important to know. The rate can range anywhere between 7-25%. Some may claim lower rates than 7% but that is a rare instance. When you work with us you can be assured that we will try to get you the best rate possible. We invite you to shop around. Corona Capital’s funding sources and low cost of doing business allows us to offer such low discount rates. Just one percentage point could mean thousands of dollars to you. Before you sell structured settlement annuity payments please read our page Know Your Discount Rate Before You Sell Structured Settlement Annuity Payments to learn more.
If you have any further questions or would like to sell structured settlement annuity payments please fill out our online quote request to sell structured settlement annuity payments or simply pick up the phone and call us today at +1 (888) 852-5658. Our Account Managers are friendly, knowledgeable and will treat you with respect. We’d love to hear from you.
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