How Your Life Contingent Payments Are Valued
If you’re reading this blog, chances are you’ve at least considered the possibility of tapping in to your life contingent payments for cash.
Often times, you’ll find that offers for your LC payments are quite a lower than what you’ve been used to, and many annuitants are at a lost for why that is. This article breaks down the different factors that go into determining the value of life contingent payments.
Why Life Contingent Payments Are Worth Less Than Guaranteed Structured Settlement Payments?
Investors like structured settlement payments for the steady income that they bring, and investors that work with Annuity Restructuring consistently offer the most money for life contingent payments.
When payments are guaranteed, investors are confident that they will get what they paid for. Life contingent payments, on the other hand, cease to be paid out by the life insurance company upon death of the original beneficiary, so investors that buy these payments are taking on more risk that the beneficiary passes prematurely. To compensate for this risk, investors typically pay less for the future payments.
So what determines the offer for your life contingent payments?
1. Time Value
This basic financial concept is at the core of valuing any fixed payment stream. $100 due in 10 years is worth a lot less than $100 due in 1 year, both because of “inflation risk” and because of the risk that the person or organization promising to make payment in 10 years may not be able to do so at the time (also called counterparty risk).
In other words, your life contingent payments coming due in the next several years will fetch higher offers than those coming due in 10 or 20 years.
2. Your Health
Staying healthy is key to living a long and fulfilling life, but did you know that good health also increases the value of your life contingent payments?
As the beneficiary of your structured settlement policy, your lifespan and longevity determine whether an investor purchasing your life contingent payments will collect steady payments for years to come.
Therefore, key health indicators like low blood pressure, a healthy diet and a drug-free lifestyle all serve to increase the amount you can be offered for your payments!
3. The Company You Choose to Work With
Purchasing life contingent payments is a more complicated and nuanced process than buying guaranteed structured settlement payments.
That’s why it’s critical to choose a company with experience. It’s the difference between getting $25,000 and $50,000 for your life contingent payments. It’s the difference between being told your payments can’t be purchased and being told that, not only can we buy your payments, but we’ll offer you enough to buy that new house you’ve been thinking about!
LCpayments.com is the only purchaser that specializes in life contingent payments. Give us a call today and experience the difference for yourself.