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Investment in Structured Settlements
Old 11-25-2014, 09:16 AM   #1
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Investment in Structured Settlements

Has anyone researched investing in structured settlements? I heard of / saw this:

higherinterest.net or Alternative Investments | Safe, High Yield | Structured Settlements -

Scam? Spam? Sounded interesting but I'm suspicious. Basically you purchase a structured settlement, usually through a well known insurance company and then receive a monthly payout for ~20 years; some with COLA.

Thoughts?
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Old 11-25-2014, 09:27 AM   #2
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What are the potential dangers in buying your very own high-yielding hunk of a lawsuit?

I pass.....
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Old 11-25-2014, 09:33 AM   #3
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As I understand it, these are court awards that insurance companies are to pay to an individual. That person "sells" his right to the award at a discount, usually approved through the courts. You'd buy that award (discounted) and then the insurance company makes the payments to you. I'd assume that there would be no chance of a lawsuit ... the insurance company has agreed to and is making the payments. Of course, I have no idea what "reality" is in these cases.
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Old 11-25-2014, 09:35 AM   #4
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I read this book, by Edward Ugel, and was totally creeped out by the whole idea of how they bought lottery settlements, which is the lower-life version of structured settlements.
http://www.amazon.com/Money-Nothing-.../dp/0061284181
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Old 11-25-2014, 09:36 AM   #5
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Quote:
Originally Posted by Steelart99 View Post
Has anyone researched investing in structured settlements? I heard of / saw this:

higherinterest.net or Alternative Investments | Safe, High Yield | Structured Settlements -

Scam? Spam? Sounded interesting but I'm suspicious. Basically you purchase a structured settlement, usually through a well known insurance company and then receive a monthly payout for ~20 years; some with COLA.

Thoughts?
I have heard of these, but stop at the thought of either having to force performance at a point of default, or resell to gain liquidity.
I would guess if you had to sell out you would face a considerable discount to face value.
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Old 11-25-2014, 09:37 AM   #6
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Originally Posted by eta2020 View Post
What are the potential dangers in buying your very own high-yielding hunk of a lawsuit?

I pass.....
A structured settlement is not a lawsuit, it is a vehicle for payment of a judgment or settlement resulting from a lawsuit. As long as the judgment is final, and you read a and understand the settlement your only concern should be the credit of the insurance company making the payments.

For the most part, quality should be much better than typical high yield paper. Liquidity is poor obviously, so to sell it will cost you.

Ha
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Old 11-25-2014, 09:38 AM   #7
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Here is one example:
Total Payout: $613,784.58

Cost and Yield: $288,470.56 to yield 5.75%

Payment Terms:
Two hundred and fifty (250) monthly payments as follows:
$1,789.57 from January 15th, 2018 till October 15th, 2038 increasing by 3% annually each October
(11/19)
Guaranteed by: Metropolitan Life Insurance Company

Again, I'm not making any claims ... just trying to figure out if this is something to think about.
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Old 11-25-2014, 09:42 AM   #8
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A structured settlement is not a lawsuit, it is a vehicle for payment of a judgment or settlement resulting from a lawsuit. As long as the judgment is final, and you read a and understand the settlement your only concern should be the credit of the insurance company making the payments.

For the most part, quality should be much better than typical high yield paper. Liquidity is poor obviously, so to sell it will cost you.

Ha
I was aware of that....

The largest risk is the lack of liquidity.

I would not buy something I don't completely understand and each structure settlement is a bit different. Maybe if I was a high skilled attorney I would consider buying some

I read some of them "still could face unanticipated future legal challenges.". I rather buy s&p 500.
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Old 11-25-2014, 09:50 AM   #9
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. I rather buy s&p 500.
Good.That is why we have markets.

Since you told OP that a structured settlement was an investment in a lawsuit, and one can invest in lawsuits, i thought some facts might be helpful.
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Old 11-25-2014, 10:07 AM   #10
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Good.That is why we have markets.

Since you told OP that a structured settlement was an investment in a lawsuit, and one can invest in lawsuits, i thought some facts might be helpful.
It is outcome of lawsuit that you buying.

Investor Alert - Pension or Settlement Income Streams?What You Need to Know Before Buying or Selling Them - FINRA

FINRA:
"Your "rights" to the income stream you purchased could face legal challenges. It may not be legal to purchase someone’s pension. And it may be difficult to legally force the original owner of a pension or structured settlement to forward or assign their income to a factoring company or investor."

So I may be later forced to invest into 500 dollars an hour lawyer.......
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Old 11-25-2014, 01:04 PM   #11
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It is outcome of lawsuit that you buying.

Investor Alert - Pension or Settlement Income Streams?What You Need to Know Before Buying or Selling Them - FINRA

FINRA:
"Your "rights" to the income stream you purchased could face legal challenges. It may not be legal to purchase someone’s pension. And it may be difficult to legally force the original owner of a pension or structured settlement to forward or assign their income to a factoring company or investor."

So I may be later forced to invest into 500 dollars an hour lawyer.......
That was a good read and answered some of my questions. While not a SCAM ... it is still fraught with some risk unless structured extremely well.
Thanks
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Old 11-25-2014, 02:28 PM   #12
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Originally Posted by eta2020 View Post
It is outcome of lawsuit that you buying.

Investor Alert - Pension or Settlement Income Streams?What You Need to Know Before Buying or Selling Them - FINRA

FINRA:
"Your "rights" to the income stream you purchased could face legal challenges. It may not be legal to purchase someone’s pension. And it may be difficult to legally force the original owner of a pension or structured settlement to forward or assign their income to a factoring company or investor."

So I may be later forced to invest into 500 dollars an hour lawyer.......
Everything you say is true. However, this does not change the fact that unless you pay no attention to what you are buying, you are not buying a piece of a lawsuit.

Ha
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Old 11-25-2014, 03:23 PM   #13
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It's not as complicated as a variable annuity based on stock market performance though.
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Old 11-25-2014, 03:31 PM   #14
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It's not as complicated as a variable annuity based on stock market performance though.
No, but it does carry some mortality risk. One hard question I'd ask is whether the income stream ends when the recipient dies. Some structured settlements guarantee a certain payout regardless at various points (to the estate if the recipient is deceased). Others don't. Even figuring out mortality can be tricky, There are mortality tables for "average" lives (male vs. female, smoker vs. non-smoker), but if you have a recipient who's collecting money due to a major injury they may live longer (because they're getting regular medical care and aren't out riding motorcycles) or may die earlier because of health issues.

Not something I'd touch, and I even know how to use mortality tables.
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Old 11-25-2014, 03:34 PM   #15
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I wouldn't touch either a structured settlement product or a VA under any circumstances. Why burden yourself with tricky rules, high fees and other issues to make a couple of percent?
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Old 11-25-2014, 03:36 PM   #16
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Old 11-25-2014, 03:40 PM   #17
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"It's my money and I want it now!"
Totally off topic, but one of the wonderful side benefits of cutting the cord on cable is almost never hearing that sort of crap again...
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Old 11-25-2014, 04:05 PM   #18
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Maybe I am oversimplifying it, but it seems this is just an annuity by a different name?

With some different risks and legal terms, but it seems in simplest form to just be buying an annuity. I appreciate any info to help my education.
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Old 11-25-2014, 04:29 PM   #19
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I tend to agree that it is essentially an annuity; sometimes with a COL increase and yet costing "less" than the face value of the payoff ... If there is more than one moving part, sometimes I get lost ...
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Old 11-25-2014, 04:59 PM   #20
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Yes, typically what you would be doing is buying into the right that an annuity beneficiary has to receive money from an insurance company.
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