Whether you are a Mega Millions lottery winner, the recipient of an insurance payout or have won a legal settlement, in most cases your windfall will not pay out immediately. Most such payments are made as a structured settlement annuity, paid in monthly portions with or without a lump sum upfront. This means you have to wait for years to access your full payout and often the dream home or car you thought you could now afford remains out of reach.
Although, depending on your tax bracket, a structured settlement can save you between 25 and 35% in state and federal taxes on interest income, selling your structured settlement in return for a cash lump sum makes sense, especially if you have short to medium-term goals that require an initial cash outlay such as starting your own business. Annuity fees also average about three percent, and in some cases a penalty of between six and seven percent is charged during the first seven years. If you sell an annuity settlement, you can get a good portion of the total value of your settlement out in one cash sum.
Just how much you get varies, though. Some online sites offer a sell structured settlement calculator that can help you determine how much you could get as a lump sum payout if you are selling your annuity. The sell structured settlement calculator usually provides an amount range based on the information you provide such as when you first started receiving monthly payments, how much the monthly pay is and when the payments are due to stop. It is, however, just an estimate and you can only find out the exact amount by enquiring with the structured settlement purchasers directly.