Annuity payments are used to pay funds through structured settlement awards. Structured settlements are used to pay out large sums of money over a specific period of time. They are oftentimes used to pay out jackpot lottery winnings or to compensate individuals who have been injured due to the negligence of another.

Annuity payments provide financial security because they are distributed on a regular basis. Individuals who receive structured settlement payments are referred to as the Annuitant. When establishing the structured settlement payout plan, Annuitants can request payment distribution on a monthly, quarterly, semi-annual, or annual basis.

Structured settlement annuity payments are regulated under the Structured Settlement Protection Act. Payments are secured by life insurance companies and exempt from income tax if payments stem from medical injury or negligence. Lottery winning annuities might be subject to taxation at state and federal levels. Once established, structured settlements cannot be altered without court authorization.

Arranging structured settlements requires the services of a qualified attorney. It is imperative for Annuitants to discuss every detail and structured settlement option available. Although inflexible upon completion, structured settlement annuities offer substantial flexibility during the planning stage.

The amount and duration of annuities are based upon financial needs of the Annuitant. In medical malpractice and injury cases, annuity payments are established based on anticipated healthcare costs, prescription medications, and physical care rehabilitation services; as well as Annuitants’ normal living expenses.

Special circumstances might arise that allow Annuitant’s to obtain early distribution of structured settlement annuities. These can include college tuition, home repairs, purchasing real estate, or business investments.

Regulations are in place to protect Annuitants from selling annuity payments. However, Annuitants can petition the court if a legitimate need for early distribution arises. Upon receiving court approval, annuities can be sold in whole or part to private investors or lending institutions.

When sold in part, Annuitants retain control over the structured settlement agreement. When receiving cash for annuity payments, Annuitants assign payments to the investor or lender. Once the cash advance is repaid, payments revert back to the Annuitant.

For example, an Annuitant requires $30,000 and receives $7500 on a quarterly basis. The Annuitant would assign one year of payments to the investment company in exchange for lump sum cash.

Investors who provide cash for annuity payments generally charge an upfront fee or percentage of the loan. Be certain to understand the terms before signing on the dotted line. It is best to have a lawyer review terms to ensure structured settlements are protected in the case of default or deceptive practices.

Not all states allow the sale of annuity payments. Court approval for structured annuity payments generally takes two to three months. When selling annuities it is crucial to plan ahead and allow time for completion of transactions.