Investment in Structured Settlements

What are the potential dangers in buying your very own high-yielding hunk of a lawsuit?

I pass..... :)
 
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.
 
Steelart99 said:
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?
Click to expand...

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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eta2020 said:
What are the potential dangers in buying your very own high-yielding hunk of a lawsuit?

I pass..... :)
Click to expand...
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
 
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.
 
haha said:
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
Click to expand...

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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eta2020 said:
. I rather buy s&p 500.
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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.
 
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haha said:
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.
Click to expand...

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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eta2020 said:
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.......
Click to expand...

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
 
eta2020 said:
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.......
Click to expand...
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
 
aja8888 said:
It's not as complicated as a variable annuity based on stock market performance though. :D
Click to expand...

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.
 
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?
 
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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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 ...
 
Yes, typically what you would be doing is buying into the right that an annuity beneficiary has to receive money from an insurance company.
 
Good luck trying to find out what the costs are in these transactions.
 
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