In USA structured settlement laws
are at both state and federal levels. Federal levels include the rules and
regulations under Internal Revenue Code whereas state level rules are under
judgment statues of periodic payment or protection statues of structured
settlement. National Conference of Insurance Legislation has proposed a
structured settlement model and forty seven states are following it. Thirty
seven states have taken the initiatives for preserving claimants Medical
benefits. Many leading social service organization are giving structured
settlement benefits including American Association of People with Disabilities.
Generally, when the claimant
approaches the insurer for the claim fund then insurer or insurance company
finds itself in payment obligations. To solve this obligation, finance company
approaches two ways: either it can purchase the annuity from other insurance
company or it can transfer this obligation to the third party where third party
holds the asset to fund this obligation.
There are two types of funding cases:
1. Unassigned funding case
2. Assigned funding case
Unassigned Funding case
The insurer or insurance company
retains the obligations of periodic payment and it funds by purchasing the annuity
from an insurance company matching upon the assets in unassigned funding case.
Purchaser seeks for the correct assets in terms of amounts and time and then
settles the structured settlement periodic payment. The company or the insurer
purchases the annuity and names the claimant payee under an annuity and the annuity
issuer is directed to ensure the periodic payments of the claimant. If any of
the claimants is alive till the end of periodic payment then that claimant will
be called as measuring life or annuitant under annuity.
Assigned Funding Case
In assigned funding case, the
insurance company or the insurer doesn’t want to retain these payment
obligations on the record. Insurance company forwards this obligation to a
third party through legal law named qualified assignment. Third party known as
Assignment Company will require that insurance company should pay the
sufficient amount to fund the accepted payment obligation. If the claimant
fails to transfer the periodic obligations then the insurance company will not
be liable to pay the periodic payments further. It is always an advantage for
the claimant has he/she doesn’t have to rely on the insurance company for the
continue credit.
Process of selling the structured settlement and its annuity
Decide yourself before selling the annuity
You should think strongly and
firmly before proceeding for selling the structured settlement. If you are in
need of urgent cash or any personal problems which can’t be ignored then you
can proceed for selling the structured settlement.
How to shop for annuity?
If you have decided to sell your
structured settlement then you can look out for other companies who are looking
for purchasing the annuity. Before selling you must have transfer agreement
signed between you and the buyer. Don’t fall in the trap of instant payments
and larger interest payments which is shown in TV commercials as it’s a serious
financial issue and before signing an agreement you must sanction the agreement
with the judge.
Homework is must before selling the annuity,
ask your friends or counsel with colleagues for the best firm. Firm should have
solid credentials and vast experience in this field to buy your annuity.
Obviously, you will opt for that company who has solid capital to buy your
annuity not outsourcing the payments to third party. Company who has good
reputation will not buy any small annuity so you should be aware of that. As,
the judge has to approve this transfer with good interest and it should not
cause you any financial hardships; and it will increase the credentials so look
out for the good firm.
Start main process of selling your annuity
You must complete the legal
process before getting to any type of agreement with financial company. Once
you have find the best firm for you, then you will find state and federal level
laws come into force for the protection of your payments and rights. You have
to submit the complete documents and the settlement contract signed between you
and the insurance company to the buyer. You have to convince the buyer that you
will give discount at your payment which is in turn the profit for the buyer.
Under Structured Settlement Protection Act you will have choice to either have
the right thing or protest against the buyer and seek some outside professional
help.
Once your documents are approved
then it will be send to you for sign. If you return the documents with sign as
soon as possible then the legal process will begin and soon you can receive
your payments. This entire process takes almost two months and other side buyer
company will pay you some cash in advance.
Convince the judge with valid reason
When you return the signed
documents, the attorney hired by the insurance company will file a case in the
court and the hearing date will be scheduled. You have to present the valid
financial crisis to sell this annuity and you should not keep your family in
financial problem. Also, you can suggest some parties who already had the
conversation with you for buying this annuity. Generally, judge approves the
transfer in this type of hearings.
Get your
payments
Once judge approves your transfer, the acknowledgement will
be transferred to the insurance company and you will start receiving your
payments. In few cases, the buyer purchase some part of your income, then the
payments will be send to the buyer from the insurance company and they will
deduct some share of amount and it will be forwarded to you.
You always have the right to sell or retain the annuity; if
you wish to resell it again then you should follow the process from beginning.
