Recently, the number of people accepting one-time “lump sum” payments in place of periodical payments over a long period of time has been increasing. With the extremely long-term that have come to be the norm as of late, the fact that people are opting for a short-term, more tangible payout is hardly surprising. One of the important but difficult to intuitively understand processes involved is called structured settlement securitization and while sounding quite complicated, is actually not that difficult of a process to understand. The first step to understanding this concept is to know the three parties involved: the settlement payer, the settlement buyer, and the settlement seller. These three terms are explained below:

Settlement Payer: This party pays particular types of structured settlement annuity to you. It could be a government, a company, or another party.

Settlement Buyer: This is the party offering to buy your periodical settlement for a lump-sum payment.

Settlement Seller: This is you, the party that will be selling the periodical settlement to the buyer.

After understanding how the sales process goes, you need to understand the process of securitization.

In short, securitization is a financial practice where various types of contractual debt are pooled and sold to investors as bonds, pass-through securities, or Collateralized Mortgage Obligations (CMOs).

So what does this mean for you? It means that when you sell your payments to the buyer for a lump sum and they securitize it, you will no longer have any problems if the payer defaults or for some other reason becomes unable to pay the promised periodical payments. For instance, if you sold your payments to a settlement buyer and the settlement payer went bankrupt and was unable to continue paying the money, the settlement buyer would be unable to come to you for the money.

In short, securitization is about reducing the risk to you in selling your lump-sum payments.

Related: types structured settlement annuity

So you’ve won the lottery. Congratulations! By this point in time you’ve probably figured out that you won’t be hit by a shower of $100 dollar bills falling down all at once, but rather that you’ll be getting your money in small (or maybe not so small) annual payments over a long period of time. Some people, possibly including you, don’t like dealing with small periodic payments and want it all in one big swoop. There are a number of reasons for this (debt, short life expectancy, etc.) In these cases, it’s best first to consult with a lottery lump sum calculator. This article highlights two of the most useful lump sum calculators around the Internet.

For Quick Numbers: The lottery lump sum calculator at David Wier offers options for both Powerball and Megamillions as well as giving you a tax reduced version. Keep in mind, however, that the tax rate here is 28%, a total that will differ depending on your state.

For In-depth Calculation: The lottery calculator at Gguldens has more options than the previous calculator but sacrifices ease of use if you’re looking for a quick total. Pay particular attention to the tax rate as 31% has already been filled in. This calculator is useful if you want to compare how much you’d get with a lump payment compared to how much you’d get with periodical payments. To find the total, just multiply the periodic payment amount after taxes by the number of years you’ll receive the payment.

Whatever calculator you decide to use, remember that if you’re going to have to find a company to buy lottery payments if you decide to turn your payments into a lump sum. Be sure to research these companies thoroughly as you’ll want one that either matches or is better than the offer shown in the calculator. Good luck!

Related: buy lottery payments

There are several ways to go about creating your own lottery payment plan. The first is the standard “structured payment” where you’ll be payed a bit at a time over a long period of time. For your personal financial health, this might be the best way to go as periodical payments can help you manage your money and lifestyle better whereas a big payment at once could make things more difficult once you start to consider potential problems like friends, relative, and scam artists asking for money or huge lifestyle changes (new house, car, etc.) that can turn your seemingly big payment into a much smaller amount than you originally anticipated. If you’re worried about these things, then it is probably best to stick with the periodical payments.

However, perhaps you want to pay back your debt quickly or are getting older and might not have the chance to enjoy your newly found wealth. In these cases, and some others, it may be a good idea to sell lottery payments to a company in exchange for a large lump sum. In doing this, you’ll receive a lower overall amount but can will be awarded your funds relatively quickly (it does take some time as the sale still needs to be approved). Do keep in mind that the actual amount that you’ll receive can differ greatly depending on a number of factors but that starting with an online lottery lump sum calculator is useful for getting a ballpark estimate. A simple web search can help you find many of such calculators.

Whatever you decide to do, make sure that you take care in your decision, carefully weighing the pros and cons of both the structured payment plan and the lump sum payment. Do your research, take your time, and make smart, logical decisions.

Related: sell lottery payments, lottery lump sum calculator

If you’ve been awarded a settlement and are convinced that you want to exchange it for a lump sum, the next step is figuring out how to find the top structured settlements companies to make sure you’re getting the highest payment and best treatment possible. You will only have one chance to get this right so please take are in choosing the company. This article presents several questions and strategies for finding the best companies.

1: Ask the important questions.
What companies lead the structured settlements market? Specifically…
What is the company’s market share?
How long have they been in business?
How good is their general reputation?
Exactly what kind of services do they provide?
Do they buy your settlement or take a loan against it?
How have clients reviewed specific companies in the past?
Do their testimonials seem real or are they fabricated?

2: Use the Internet to Your Advantage

There are nearly a limitless number of resources on the Internet for searching about the best companies. In addition to looking for basic company and biographical information, try to dig deeper to find true testimonials about the company, how their clients were treated, and any other relevant information. Use the Internet searches to look for previous clients, find their information (if publicly available), and contact them regarding their experience. I would caution against phone calls but an e-mail, if explained correctly, can be a useful tool for bridging the gap with would-be strangers that have been clients of the company you’re considering.

Conclusion:

Although these strategies are fairly basic and may seem obvious to some, they are absolutely essential in this day and age to your search for a good settlement company. Make sure to research correctly as you only have this chance once and do not want to be taken advantage of.

Related: structured settlements

Knowing whether taking out a structured settlement loan is a good idea or not can be difficult after being awarded a settlement. Perhaps you need money before the structured settlement commences or maybe you just don’t want to wait for each payment to come. Whatever the case is, there are certain times where you should get the lump sum amount and when it may not be in your best interest. Below are two reasons why it might be a good idea and one reason it isn’t.

Why It May Be a Good Idea:

Reason 1: You have to pay for something immediately and need the money now.

Not everyone can wait until the court starts the settlement to deal with immediate bills and other financial problems. You’ll likely lose money in the long run, but if you need a large amount of money now, there are many top structured settlement firms willing to trade your structured settlement for a (slightly discounted) lump sum amount. Know, however, that even having a company buy your structured settlement will likely take some time.

Reason 2: You’re an elderly lottery winner and want the money now.

With the amount of time that some settlements take to receive, there’s no reason to wait an extended amount of time to receive your monetary award if you’re not going to have plenty of time to enjoy it. Taking a loan might be the best option.

Why It May Not Be a Good Idea:

Structured loans can be dangerous (you might get stuck paying more than you’re receiving) and are generally discouraged by state governments through tax legislation. In other words, there’s a risk in losing even more money through loan interest than you’re giving up to get the lump sum payment. That said, if you do opt for a loan, make sure that you know what you’re doing and have a very good reason for it.

Related: Structured Settlements, top structured settlements