Annuity and Lump Sum Differences You Should Keep in Mind
Congrats! You’re on a roll lately. First, you graduated college in one piece — hopefully — and now you are expecting a settlement payment. It’s important to take a minute to think about everything now. You want to make sure you make the responsible decisions so you can have a secure financial future.
Imagine if your high school or freshman year self received a large settlement. You would blow that money on mopeds and beer so fast. You’re much smarter than that now, though. It’s time to think like the adult that you are becoming and not blow all your money at once.
If you are receiving a structured settlement payment, there are a few options you have. Annuity payments and a lump sum payment. There are a few annuity and lump sum differences that you’re going to want to consider.
One of the major annuity and lump sum differences is the actual amount of the payment. Annuity payments are split up into annual payments that typically increase over time and build up to your settlement winnings. This option can be good especially for the person we talked about earlier — the less financial responsible you.
The worst thing in the world would be to blow threw all your settlement money in a few months before you even have the brain capacity to understand what you’re doing. If you had annuity payments when you were that young and naive, you would — again, hopefully — start to realize that you should actually save some of this money instead of blowing it every time the check rolled in. It would probably have taken you three or four years of payments to figure that out.
On the other hand, if you elect to go with one large lump sum payment, if handled responsibly, you’d be able to take care of nearly all of your financial troubles.
College is expensive and so is life. Getting an extra couple of dollars can really help during these difficult times. Every single year in the U.S., more than $6 million is paid through structured settlements. Going to more than 37,000 U.S. citizens, the average payout for a structured settlement is around $324,000.
If you got that money when you were 18 that’d be one Rolex watch, one $100,000 moped, and about 2,000 cases of beer.
Handling that money as an adult, however, can really benefit you for the future. You’ll be able to pay off all or at least most of your student loans, payoff credit card debt, purchase a reliable non-moped vehicle, start your own business and have many more responsible options.
If you want to receive a lump sum of cash to help secure your financial future, iSettlements can help you and buy structured settlements, annuity, or pre-settlement loans.
If you’re feeling overwhelmed about the annuity and lump sum differences but want to talk to a financial expert, contact us today!