08 Mar 2008 12:28:38 | Amit Laufer
Annuity Transfer - What are the Risks
Many people who know in the back of their minds that they got
the possibility to transform a monthly payment or annuity long
term payments into a big lump sum and by that to relieve some
temporarily financial problems, or need to buy a new car or a
house or help their children and so forth are tempted to
exercise this process into action. Although it is a very natural
feeling and sometimes even a real life need or deep inner quest
for power and control, it is not in their best financial
interest to say the least.
It is no wonder that the U.S federal laws encourage long term
payments in both cases like Structured settlements and lottery
winnings. There are many good reasons for that and I’m going to
spell them out as clear as I can.
- In some countries around the world it is legal to pay for
lottery winning in one lump sum. Experience shows many of these
people lose most or all of their money in a few years Time, due
to the following reasons:
- Ordinary people who get into their possession a very large sum
of money don’t really know how to manage their treasure or how
to invest it wisely, they are not prepared for it and they are
overwhelmed with a delusion of over abundance of wealth, they
become totally careless on how and on what they spend their
money.
- Even if they invest their money, they go to high risk
speculative investments as they try to get high yields. Instead
of going for a much solid and safer, “widows & orphans” type of
investment portfolio. Neither do they go for the golden middle
way in between of a mixed portfolio. They don’t use investments
advisers or financial consultants.
- They become over generous with their family and friends, they
buy their children homes, cars or any other materialistic
requests, they “lend “ money to a friend in need...
- They listen to shrewd business people who talk them into
investing into all kinds of business adventures that seems to
them very profitable but in a short while turn into total
failures and the money is gone.
- All kind of addictive behaviors like betting horse races or
going to play the roulette in the casino are now intensified
with the feeling of power and wealth, it might drive the person
to gamble high sums of money as if there is no tomorrow.
- Believe it or not but criminal elements might engage in
putting pressure to extort monies from the overnight rich poor
guy. They might threaten to harm his family etc’
- Charity institutions start to call all day and night asking
for donations to a very noble causes, they even send some slick
reps to convince him to donate money.
- His own children, some times his spouse becomes very greedy
and exert emotional pressure to give them more and more money.
In some cases the sudden riches literally ruined the families.
As I have shown you above, getting a large lump sum of money
might be a risky thing, this is In addition to the fact that you
are loosing a lot of money which was Tax free, that alone might
be a difference of anywhere between 35% - 65% , add to it the
profits of the fund who bought the annuity from you and you are
loosing big time. It is not recommended for an injured or a
disabled person, to transform the whole Structured Settlement
long term payments into one big lump sum or you might find
yourself one day without the money and facing high medical
expenses and other bills you cannot afford.
About Author :
About Me Name:Amit Laufer Age: 46 Location:New York, United
States MBA - International Trade & Finance - Heriot-Watt
University. Bsc. Computers and Information Systems - Long Island
University - C.W Post Campus. Hobby: Photography. Married with
two Children. 
