This article explains how the Structured Settlement Protection Act protects holders of structured settlements and prevents them from losing large percentages of their money when selling their annuity.
On January 22, 2002, a bill was signed into the law by the then president George W. Bush. This act would forever change the sufferings of those structured settlement holders who chose to sell their annuities for a lump sum. As you probably know or would definitely want to know, there are funding companies out there who are always ready to buy your settlement in exchange for a lump sum. Companies then enjoy a profit as the lump sum received by you is not the total value of the settlement. Almost around thirty percent or more of the total settlement amount would go to the funding company that specializes in structured settlement dealings.
Prior to above stated law, any person looking to covert his/her settlement annuity into a lump sum was taken advantage of by these funding companies that offered to buy their settlements. There have been several cases where the companies have mistreated the annuity holders by offering unreasonable prices or withholding information like the tax disadvantages that the plaintiff has to face if he/she decides to sell the annuity etc. But thanks to this act, the interests of the annuity holders are now protected by the state.
According to the Structured Settlement Protection Act of 2002, any transaction involving the sale of settlement annuities to a funding company should be compulsorily be approved by a state court, which will then investigate if the lump sum in exchange for the structured settlement annuity is a reasonable one and protects the interests of the annuity holder and that of those who depend on him/her. This act also brought in the issuers of the annuity into the circle. This has prevented the annuity issuers, life insurance companies from being caught unaware when the structured settlement issued by them suddenly has a new recipient resulting due to sale of these structured settlement annuities by the original owner. This act also calls for the plaintiff selling the structured settlement annuity to receive the help of an industrial expert on all the steps involved in the process. This is a must to anybody who is looking to covert their annuity to a lump sum as the results of this process will definitely affect their future quality of life.
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