From Guaranteed Payment To Secondary Market Annuity- Part 2
In episode 1, I outlined how our friend Jane won a guaranteed Structured Settlement, and what happens when she decided sell some of her payments. Today we’ll look at how her Structured Settlement payments become YOUR payments.
Let’s pick up where we left off yesterday. Jane decided to sell half of her payments that she won as a structured settlement in a court case. She decided to sell 15 years payments of $500 a month to a factoring company…
The factoring company gets to work. Factoring is a cutthroat business, and is primarily about marketing. The word “structured settlement” is one of the most expensive words to advertise for in Google. It can cost advertisers over $100 to get a single click from an ad trying to attract sellers like Jane.
Once the great salesperson at the factoring company gets Jane to sign a contract to sell her payments, they really have to start spending some money on top of the thousands of dollars they spent to acquire her as a customer in the first place.
Factoring companies have to prove that no one is entitled to Jane’s payments except Jane, and then they have to appeal to the court that awarded Jane the payment, and allow her to change the terms of her payment to split off $500 to sell to a new investor.
In the end, a factoring company may spend $5000 on Jane’s case alone, and work with attorneys around the country to make sure Jane has no bankruptcy, alimony, child support, creditor claims, or any other issues that would lay claim to her payments.
As they are doing credit checks on Jane, and getting a court date scheduled, factoring companies tell their list of trusted advisers and investors about this case. They call me and say they have a nice immediate income case of $500/ month available from Met life coming soon.
Because you and I have talked and I know what you are looking for based on your buyer profile (more on that in another e-mail soon… ) or because your attentive broker told me what his clients were looking for, right away I know this is the case for you. Before I even load the deal into my web based database, I give you or your broker a call and follow up with an email outlining the payments.
The case made available to you is 180 monthly payments of $500 each, at a discount rate of 4.5%. The purchase price to you is just over $63,000 and is exactly what you were looking for.
You’ve been looking around too. Your money is in a CD earning a pitiful 1.2%. And you priced a 15 year period certain annuity, but it would cost about $77,699.03 for this exact same income stream.
Right away you can see the value here and realize this is “The One.” You make a quick decision to buy Jane’s 180 monthly payments of $500 each, starting today and ending 15 years from now, issued by MetLife.
Now you can see how this guaranteed settlement awarded to Jane becomes a payment stream you decide to buy.
In the next installment, I’ll walk you through the steps of the purchase process that make it irrevocably yours… Stay tuned!
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