In order to choose between the best structured settlement annuity companies, you first need to understand what they actually do. Here's a quick explainer. Structured settlements are large sums of money paid out to you via things like lawsuits, medical insurance claims, or lottery wins. Instead of paying you the full lump-sum in one go, structured settlements are paid in smaller amounts over a period of time. The problem with this is that - if you settled a court case, for example - lawyers fees are due immediately, and you don't have the large sum of money to pay them immediately. So, effectively, the best structured settlement annuity companies help you to manage these situations by releasing larger sums of money on the basis that they will be paid off by your settlement.
It works the other way too. You may choose to release money from a structured settlement to make a large investment in something, like property or a gift to a family member. The best structured settlement annuity companies will help you do this too, even if you don't have bills to pay immediately.
Many companies here offer a variety of services to help you manage the money most effectively. You can choose to cash-out completely, and just take the full lump sum. Or you can cash part of the sum out, and let the rest come to you at a later date. It's all done for fees and service charges, so using a structured settlement annuity company will cost you a slice of your overall payment. The financial freedom they offer, however, often makes it worth the price and, if you have bills to pay immediately, it's far better than taking out a personal loan online, and if you're investing in property it can work out cheaper than some of the best mortgage lenders.
1. J.G. Wentworth: Best structured settlement annuity company
Best overall pick, and a very reliable partner
Application process: Visible, plenty of information, managed by calls and emails | Costs: Fees are provided upon application | Purchase options: Structured settlements, various annuities such as pension and medical, lottery, different types of structured settlement payment plan, home mortgages | Calculators, service and support: Live online chat, contact number, fast digital quotation process
J.G. Wentworth is almost always featured in the top ten of any structured settlement annuity company list. It has been around since 1991, and offers a sense of stability and trust in its customers. It provides a detailed application process that can be managed either online or on a call, and it has live chat features for those moments when you’re stuck or need some help figuring things out.
The company is accredited with the likes of the Better Business Bureau and the National Association of Settlement Purchasers, and it offers you three different types of sale and payout option. You can sell all payments, sell a period of payments, or sell a portion of each of your payments. These are the main services that most will be looking for in a structured settlement pay-out.
The only real issue we have with J.G. Wentworth is the lack of visibility around fees, until you're almost committed. While not excessive, the provider could use more upfront clarity here, especially as competitors do offer this.
- Read our J.G. Wentworth review
2. Fairfield Funding: Best for information and support
This one has a superb rating from customers, all thanks to its support
Application process: Lots of contact options | Costs: Not visible, become apparent through the process, interest rates clearly explained | Purchase options: Structured settlements, various annuities, lottery | Calculators, service and support: Live online chat, contact number, annuity calculator
Fairfield Funding has put a lot of effort into making sure that customers can find out the information they need, when they need it. The site offers a ton of customer connection options from live chat and calls to emails and online registration.
You will also find a lot of information on the site about structured settlement annuities which makes it an excellent place to start if you don’t know how the process works or what to expect. You also get a calculator that allows you to work out an estimated fund payout based on some basic calculations, videos, step-by-step instructions, and quick chat buttons.
- Read our Fairfield Funding review
3. DRB Capital: Best for customer service
Best for customer service, and it has a very modern website
Application process: Visible, plenty of information, managed by calls and emails | Costs: Low fees and no hidden charges | Purchase options: Structured settlements, various annuities and pre-settlement funding | Calculators, service and support: No live online chat, contact number, Spanish and English customer support
DRB Capital has some of the best customer reviews on Consumer Affairs, achieving an overall ranking of five out of five stars from 41 reviews in the past year. It’s a young company but it has a good reputation and offers some unique propositions to the market. The first is that it allows for customers to interact with its staff in either English or Spanish – it is the only structured settlement annuity site reviewed to provide this option.
It is also the only reviewed platform to assure customers that they will deal with only one person throughout their entire journey with the company. You will receive a dedicated representative who will work with you until you receive your funds which is, let’s face it, a highway to sanity when compared with having to explain the same situation over and again if something has gone wrong.
Another plus in the DRB Capital box is the fact that it offers you instant Zoom call meetings to kick off your relationship in real-time. You can get started immediately with great customer service from the get go.
- Read our DRB Capital review
4. Strategic Capital: Best for no unexpected fees
If you're looking for upfront costs and no hidden fees, Strategic is king
Application process: Visible, plenty of information, managed by calls and emails | Costs: No hidden charges | Purchase options: Structured settlements, various annuities such as casino wins, lottery | Calculators, service and support: No live online chat, contact number, fast digital quotation process, no online calculator
Strategic Capital prides itself on not investing into advertising and passing those savings on to the customer. The company manages structured settlement annuities, lottery winnings and payments without charging you additional fees or service charges.
Strategic Capital also claims to make some of the best offers on the market – often suggesting that you get a second opinion before you make your final decision – so you are very likely to get excellent value for money. The site also includes a ton of information on what settlement annuities are, how to use them, and really pays attention to the concerns customers have when embarking on this process.
- Read our Strategic Capital review
5. Peachtree Financial Solutions: Best for variety of options
Offers a variety of options, and is a reliable partner
Application process: Visible, plenty of information, managed by calls and emails | Costs: Not visible, become apparent through the process | Purchase options: Structured settlements, various annuities such as pension and medical, lottery | Calculators, service and support: Live online chat, contact number
Peachtree Financial Solutions is a subsidiary of J.G. Wentworth which adds gravitas to its offering and it is has one of the biggest varieties in terms of structured settlement offering.
You can get payments for structured settlements, a variety of different annuities such as pension and medical, lottery, casino payments, deferred annuities, and financial annuities. The company also take the time to explain what these are, what you need to consider before selling them, and what process you will need to follow for each one.
- Read our Peachtree Financial Solutions review
What is a structured settlement?
If you've been in an accident, won or settled a lawsuit, or received a payout from a lottery, you may receive a structured settlement. What this means is that you receive your settlement in monthly payments rather than a single lump sum. A structured settlement can last for a set period of time, 30 years for example, or until the death of the beneficiary.
If you have debts, medical bills or a significant expense looming, you may want your cash up front. There are many services that buy structured annuities in exchange for a single cash payout. In fact, you may have seen a commercial or even been contacted by one of these companies since they market their services aggressively. Many brokers will offer different types of structured settlement loans as well. In these situations, you can borrow cash against your structured settlement, just like you can with a loan for any other asset.
You can sell the entirety of your structured settlement or a portion of it. Many factors affect the amount you'll ultimately receive, including the total amount of the settlement, the number of payments you're selling and how often these payments are made.
What is the process for selling my structured settlement?
The process for selling a structured settlement is lengthy and needs to be approved by a court. Usually it takes two to three months to complete a sale.
Selling a structured settlement should not be undertaken lightly. Since a court must approve the sale, the entire process can take several months. The process differs widely depending on the state you live in. Most structured settlement companies will aid you in the process.
If you're considering selling a structured settlement, you'll want to follow these important steps:
First, shop around to find the best quote. Structured settlement companies apply what's called a discount rate to the future payments you receive, so the lump sum payment is smaller than the total amount of your settlement.
Second, you'll need to provide documents to the company you are selling the structured settlement to. This includes the documentation from the insurance company responsible for the annuity, the settlement and release agreement from a lawsuit, and the application for selling the settlement. If you're divorced or have declared bankruptcy since receiving your annuity, you may need to provide additional documentation.
Third, depending on the state you live in, you may be required to consult an attorney or a financial adviser before selling your structured settlement. You can find a list of the state-by-state requirements here.
Fourth, a judge will need to approve the sale of your structured settlement. The judge will take steps to determine whether you understand the terms of the sale. You'll also need to demonstrate that you have a convincing need to sell your annuity. Most structured settlement sales are approved, but reasons for denial include a failure to demonstrate adequate financial need, improper documentation or a poor discount rate from the company.
Pros of selling a structured settlement
You get immediate access to your money instead of receiving it monthly over several years.
Lump sum tax
The lump sum of your settlement retains the same tax status as your initial settlement. An insurance settlement is tax free – so, too, are the proceeds from selling one.
You can sell a portion of your settlement without depleting the entire annuity.
Cons of selling a structured settlement
Loss of future gains
When you sell your structured settlement, you give up future value for present gains. Structured settlement companies take into account the depreciation of future earnings and apply a discount rate to your settlement (more on that below). What this means is for a $100,000 settlement, you can expect to receive anywhere from $30,000 to $50,000.
Long time to process
It can sometimes take months for the paperwork to be completed and for a judge to approve the sale. If you need money immediately, you may want to look into alternate ways to get it.
Compromised income stream
If you rely on your structured settlement to pay bills, selling is unwise. You can compromise your income stream and leave yourself at risk for dire financial consequences.
What is a discount rate?
The discount rate represents the amount the company deducts from the total of your structured settlement. While it may sound like a simple percentage, it is much more complicated than that. The discount rate assumes that a dollar today is worth more than a dollar in the future and applies that principle to the payments you're selling.
Take the example above of a $100,000 settlement that is sold for between $30,000 and $50,000. This implies a discount rate of 50 to 70%. But discount rates typically range from 8 to 18% and can sometimes be as high as 30%.
The math doesn't seem to add up, and this is because the structured settlement company applies a different discount rate to each payment depending on how far into the future the payment is. Therefore, next month's payment has a different discount rate than a payment five years from now.
When you receive a quote from a structured settlement provider, just be aware that it will usually reflect an average of all the discount rates on all the payments you plan to sell rather than it being a certain percentage applied to the total of your structured annuity.
There is a benefit to selling just a portion of your settlement. By selling some of your forthcoming monthly payments, they have a lower discount rate than payments that are further out in the future, which means you'll be able to get more money and still have access to future payments.
Tips for choosing a company
Here are few more things to keep in mind when selling a structured annuity:
Explore your options
Get multiple quotes from different structured settlement companies. You're not obligated to go with the first offer you receive.
Once you get an offer, don't feel like you need to accept it. You can negotiate the rate and try to find a middle ground with the buyer.
Understand what you're getting into
Most states require some kind of consultation with an attorney or financial advisor. We recommend taking advantage of that service so you fully understand the impact of selling your annuity.
As mentioned earlier, when you sell your structured settlement, the payout is not taxed. The exception, though, is from lottery winnings, which are taxed, and the funds from selling a lottery annuity are taxed as well. And if you invest the money from your lump sum payout, earnings from those investments will be taxed.
If you've received a structured settlement through a lawsuit, an accident or winning the lottery, selling it to a structured settlement company can let you take advantage of that money more quickly. We've assembled a lineup of the 10 best structured settlement companies so you can explore your options and find the best deal for you. You can read more about these companies and what they offer in our buying guide.
Avoid structured settlement scams
Structured settlements are complicated, and the industry isn’t very transparent. Unfortunately, that means it’s easy for scammers to find people to prey on. Here are some things to watch out for as you sell your structured settlement or annuity:
One simple way to avoid scams is to do a little research before calling. Check to see if the company has had any lawsuits brought against it and if any complaints have been brought to the BBB or the CFPB. You should also make sure the company has a physical location. Further, find out how long the company has been in business – you’re less likely to be dealing with scammers if the company has been operating for several years. Long-standing companies are also more likely to be in compliance with the various rules and regulations that govern the selling of structured settlements and annuities.
Another way to avoid scams is to contact the settlement companies yourself. If you get cold called by a structured settlement company, it’s likely it found you through court records or it paid someone for a referral. If you want to sell your settlement or annuity, you should be in the driver’s seat and initiate the contact yourself.
Be wary of any company that tells you it doesn’t charge fees – it's likely it has hidden some of the costs in the discount rate it applies to your settlement. If a company claims there are no fees, you’ll likely pay a higher percentage and recoup less on your settlement payments.