Why do Companies Purchase Structured Settlements?
Posted on January 25, 2008 - Filed Under Finance General |
If you’re considering selling your structured settlement, at some point you’ll probably wonder why on earth companies want to buy them. The whole reason people want to sell Structured Settlements is because they find the payment terms disadvantageous. How does a company benefit by purchasing a structured settlement when the sellers themselves find their terms so undesirable?
First, consider that structured settlement companies are not interested in your structured settlement alone. Your Structured Settlement would be added to a large portfolio of other structured settlements that have already been purchased.
In simpler terms, structured settlement companies have more financial resources, so the limitations that hinder the value of your structured settlement for you do not have the same impact on structured settlement companies. A low-yield 100-acre farm might quickly exhaust a small farmer’s limited financial resources. When added to an agricultural firm’s 10,000 other acres, the 100-acre farm may become an asset instead of a financial burden.
Of course, it isn’t all gain when companies purchase a structured settlement. They must pay salaries to financial experts and other staff members, transfer fees, advertising costs and other expenses. These costs are addressed in the discounted value sellers receive, and ideally, some profit on the investment is eventually returned.
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