Selling Life Contingent Payments: A Roadmap

Structured settlements are designed to provide a predictable payment stream over time, but sometimes life circumstances call for immediate financial liquidity. The process of getting funding for your future life contingent payments can seem like a complicated one, especially for those who have not gone through the process before or have only done so with guaranteed settlement payments. Life Contingent Capital is a specialist in valuing and funding life contingent payments, and have helped many individuals achieve fast and pivotal financial relief.

How Do You Sell Them?

As you may know, life contingent payments are only payable by the annuity issuer so long as the primary beneficiary under the structured settlement annuity contract is living. These circumstances have led some annuitants to consider entering a process to “sell life contingent payments” to receive their present value now instead of waiting for them to come due under the annuity policy. However, unlike guaranteed payments, in this case health and mortality risk play a role in determining that present value.

To understand this, it’s important to have a basic understanding of both sides of the payment assignment transaction. On the one side is the annuitant looking to raise cash for future payments, and on the other is the purchaser looking to pay cash in return for receiving those future payments. Sometimes these purchasers are professional investors and sometimes they’re folks nearing retirement and looking to supplement their monthly income. Either way, the purchaser will be cognizant of the risk that comes with “buying life contingent payments”: that the primary beneficiary passes away prematurely and the annuity issuer ceases to make payments. This could represent a loss on investment for the purchaser.

Things To Remember When Selling Your LC Payments

As with many risky asset classes, the risk to the purchaser associated with buying life contingent payments is mitigated by paying the appropriate price for them. A lot of this risk has to do with the lifestyle and estimated longevity of the original beneficiary of the annuity policy, meaning a healthy annuitant that leads an active lifestyle presents less of a risk of loss on investment to an investor purchasing that annuitant’s life contingent payments. Conversely, an annuitant that engages in activities known to be harmful to one’s health and shorten one’s lifespan will experience a sharper discount to present value when “selling life contingent payments.” Providing specific discount rates is difficult without knowing an individual’s circumstances, however Life Contingent Capital is often able to provide a quote after some basic information is provided, so call (888) 633-5669 for your customized quote today. Keep in mind, factors affecting the present value of guaranteed structured settlement payments, such as the underlying annuity issuer as well as the timing of the payments themselves, will influence the present value of life contingent payments as well.

Conclusion

Once a quote for assigning life contingent payments is received and accepted, and once relevant requirements are met per state law, LC Capital will guide you through the four-to-six week process of receiving your funding. Best of all, we charge absolutely no fees or penalties for our services, so you can be sure of the amount you will receive. An account representative will be with you every step of the way and answer any questions you may have along the process.

Life Contingent Capital and its affiliates are purchasers of assets. Nothing written on this website or blog should be construed as financial, tax or legal advice; you should obtain independent financial, tax and legal advice in connection with any transfer of structured settlement payment rights.

Chung Nguyen