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Is Structured Settlement Life Insurance Necessary?

A structured settlement is the payout of funds over a period of time. Structured settlement life insurance is a great way to secure your future by knowing that you will receive checks for the rest of your life (or until all funds are paid). People often go into a structured settlement with the best of intentions, but as life rears its ugly head, unforeseen expenses pop-up, and then they begin to question whether that structured settlement was or was not a good idea.

Structured settlement life insurance is usually used as collateral for the lender. When that time comes and you need to cash in your settlement for a lump sum payment, many lenders will require that you have life insurance. There is a huge burden of risk on the back of the lender, so they will use this as a form of security when they lend you money against your settlement.

Don’t forget, when you collect the payments on your structured settlement, it is tax free income! There are a lot of benefits to having a structured settlement, but when bills are due, bills are due, and they don’t wait for your next payment to come. The next choice is to cash out your structured settlement by getting a lump sum payment from a lender.  Structured settlement life insurance may be required from a lender that you work with.

Structured settlement loans are very commonplace and often save individuals and families from financial hardship. There are thousands of lenders out there that are willing to give you an upfront payment on your settlement, but best believe they will make a hefty profit on their money! Lenders are in the business to make money, so expect to pay interest to them to get that quick cash.

A structured settlement loan has its pro’s and con’s. There are too many to list, so I am going to keep it simple by giving the #1 Pro and the #1 Con:

Pro #1 – Get your money quickly. Instead of having to wait years for your payout, you can cash out early and receive one lump sum payment. Structured settlement life insurance is a must in this economic environment.

Con #1 – You will have to pay a percentage, or a fee, to the lender in order to receive that quick cash. There is no lender in the world that will give you money upfront without collecting some type of “fee” or percentage, most commonly referred to as interest.

Structured settlement life insurance really should only come into play when you are planning to cash out your structured settlement.  It is important to put a lot of thought into all financial decisions, especially those that involve signing contracts with lenders.

Always read all of the fine print before signing anything, and make sure you are in full understanding of all of the terms and conditions before cashing out your structured settlement. If you do cash out early, make sure you put some of that money aside for a “rainy day”.

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