It is no wonder that the U.S federal laws encourage long term payments in both cases like Structured settlements and lottery winnings. There are many good reasons for that and Im going to spell them out as clear as I can.
- In some countries around the world it is legal to pay for lottery winning in one lump sum. Experience shows many of these people lose most or all of their money in a few years Time, due to the following reasons:
- Ordinary people who get into their possession a very large sum of money dont really know how to manage their treasure or how to invest it wisely, they are not prepared for it and they are overwhelmed with a delusion of over abundance of wealth, they become totally careless on how and on what they spend their money.
- Even if they invest their money, they go to high risk speculative investments as they try to get high yields. Instead of going for a much solid and safer, widows & orphans type of investment portfolio. Neither do they go for the golden middle way in between of a mixed portfolio. They dont use investments advisers or financial consultants.
- They become over generous with their family and friends, they buy their children homes, cars or any other materialistic requests, they lend money to a friend in need...
- They listen to shrewd business people who talk them into investing into all kinds of business adventures that seems to them very profitable but in a short while turn into total failures and the money is gone.
- All kind of addictive behaviors like betting horse races or going to play the roulette in the casino are now intensified with the feeling of power and wealth, it might drive the person to gamble high sums of money as if there is no tomorrow.
- Believe it or not but criminal elements might engage in putting pressure to extort monies from the overnight rich poor guy. They might threaten to harm his family etc
- Charity institutions start to call all day and night asking for donations to a very noble causes, they even send some slick reps to convince him to donate money.
- His own children, some times his spouse becomes very greedy and exert emotional pressure to give them more and more money. In some cases the sudden riches literally ruined the families.
As I have shown you above, getting a large lump sum of money might be a risky thing, this is In addition to the fact that you are loosing a lot of money which was Tax free, that alone might be a difference of anywhere between 35% - 65% , add to it the profits of the fund who bought the annuity from you and you are loosing big time. It is not recommended for an injured or a disabled person, to transform the whole Structured Settlement long term payments into one big lump sum or you might find yourself one day without the money and facing high medical expenses and other bills you cannot afford.
Settlement LoansA settlement loan is not actually a loan but rather a cash
advance against any proceeds that may be received from the
pending litigation. Settlement loans are essential to victims of
personal injury who are without sufficient income and are
awaiting a legal settlement.
Settlement loans allow plaintiffs to access a portion of their
future legal settlement today. Personal injury settlements and
worker s compensation lawsuits can take up to years to resolve.
However, with a settlement loan, a plaintiff can use the cash
advance for immediate and necessary living expenses, medical
bills ..
(c) Copyrights 2005 - http://annuity-structured-settlements.blogspot.com/
About The Author
Amit Laufer
Age: 46
Annuity 101 If a person has a lot of money and decides not to spend it, there are ways of making this grow. One option is keeping it in the bank and letting it grow interest. The other is investing it in the stock market with the help of a financial consultant. This professional will be able to know what stock is worth buying and when is the best time to sell.
Another way of making the money grow especially if the person does not have medical insurance will be in the form of an annuity.
An annuity is a deal made between the insurance firm and the person. This arrangement allows the insurance company to ..
Location: New York, United States
MBA - International Trade & Finance - Heriot-Watt University.
Bsc. Computers and Information Systems - Long Island University - C.W Post Campus.
Hobby: Photography
Married with two Children.
Editor of: http://annuity-structured-settlements.blogspot.com/
Amit LauferAnnuity Transfer - What are the Risks
