Settlement Quotes has received several inquiries for an explanation on why there is such a large difference between the present value and future value of a cash flow. We will use as an example the highly publicized Ciemielewski case to show our readers how the time value of money effects the lump sum payment an annuitant receives when factoring a structured settlement.
There are several reasons the National Structured Settlement Trade Association (NSSTA) is important to the structured settlement factoring industry. One of the main reasons this organization is not only important but vital to the structured settlement factoring industry is because without it there would not be structured settlements for the factoring companies to factor.
A structured settlement resulting from a personal injury tort claim can be sold for a lump sum of money to a structured settlement factoring firm. What many individuals who do sell these future payments to a factoring company don't know is they can sell as many or as few payments as they would like.
There are several indirect costs involved while selling annuity payments for a lump sum of money. The goal for many consumers is to eliminate or reduce some of these costs.
The biggest cost when selling your annuity is the time value of money. The further your future payments are away from the present time the more money you will lose when selling your payments. It is not an ideal situation to sell your payments if they are more than ten years away from their payout period.
