Get settlement money now

In recent months the news media has covered the dangers and potential pitfalls associated with selling an annuity settlement, or structured settlement annuity. A piece in the Washington Post this past summer highlighted one particular company involved in what appeared to be predatory practices.

There is of course the entirely other side of the industry, which involves buying an annuity for future investments instead of getting cash for settlements now. A structured settlement can save you somewhere between 25 and 35% in state and federal taxes on interest income that would otherwise be subject to tax. Here are four important questions to ask before you do so, with information from a financial expert and USA Today.

    1.) What Type Should I Get? There are actually quite a few option to choose from when it comes to annuities. Immediate, deferred, fixed, and variable cover the primary different types. Each has benefits and disadvantages to them that you need to discuss with a professional. For example, some annuities charge a penalty of 6 to 7% in the first seven years, while others carry annual maintenance fees of about 3%.

    2.) Am I Getting the Best Deal? Just like anything else, it’s important to shop around when it comes to buying an annuity. Once you have the specific kind picked out, you’re going to want to contact multiple insurers to try and get the best deal possible. Be aware that Senator Elizabeth Warren (D-Mass.) recently started an initiative against and to raise awareness of the fact that many people selling these annuities get reimbursed with trips and other perks for getting you into favorable deals for their company.

    3.) What Will it Ultimately Cost? There will always be fees and charges associated with annuities, the trick is minimizing them. As the name suggests variable annuities tend to have more volatility in terms of fees etc. Figuring these things out, along with of course the actual amount it will cost you out-of-pocket to setup can keep you from getting into something you don’t want.

    4.) Any Additional Features I Should Consider? Whether you want your annuity to regularly adjust for inflation, end when you die, continue for a set amount of time, or be passed onto a beneficiary when you pass are all considerations you need to make. These are factors that will depend on your specific situation and are crucial.