by John Darer CLU ChFC MSSC CeFT RSP CLTC
1. Central Question
Are you better off selling life‑contingent structured settlement payments for pennies on the dollar, or keeping guaranteed lifetime, tax‑free payments? The post’s answer is unequivocal: keeping them is almost always the better financial outcome.
2. The “Bad Idea” Being Critiqued
A new secondary‑market entrant claimed:
“You don’t know where you’ll be in 5 years and if you die the payment goes away. Selling off your payments… is a much smarter idea.”
This is entirely illogical and preadatory
- Payments can be direct‑deposited anywhere, so “you don’t know where you’ll be” is a meaningless scare tactic.
- Life‑contingent payments are valuable precisely because you may outlive mortality tables.
- Selling eliminates the upside and locks in a deep discount
3. FORO: Fear of Running Out
The post identifies FORO as the emotional lever used to push sellers into bad deals. Darer reframes it:
- Lifetime payments protect you if you live to 75, 80, 90, 100+.
- A local assisted‑living facility has a 103‑year‑old resident — a reminder that longevity risk is real and valuable.
4. Why Life‑Contingent Sales Are Especially Bad Deals
The buyer must:
- Purchase life insurance on the seller (often someone with impaired mortality).Unhedged deals have a deeper a deeper discount.
- Price in the risk of heir disputes after the seller’s death.
- Only pursue large deals, because small ones don’t make economic sense for them.
- Average transactions are around $45,000, and only “big deals” work for buyers.
5. Practical Realities
Changing address or bank account is simple — the annuity issuer just needs updated information. This dismantles the “you don’t know where you’ll be” argument.
6. Consumer Protection Warning
It is prudent for payees to take their time and seek guidance from verified, credentialed professionals.
- CSSC, MSSC, RSP, CFP, CLU, ChFC, CPA.
- Warns that some secondary‑market content is written by people with little financial education or falsified credentials.
- Alerts parents: if someone calls claiming to be “from the courts” about a child’s settlement, hang up — it’s spoofing.
7. Author’s Position (Grounded)
- Selling life‑contingent payments is rarely in the seller’s best interest.
- The marketing pitch is fear‑based, misleading, and financially illiterate.
- Lifetime income is a critical safety net, especially for injured individuals
Related Reading
Structured Settlements for Seniors Explained Clearly – Structured Settlements 4Real®Blog
Structured Settlements for Seniors and Financial Stability – Structured Settlements 4Real®Blog May 17, 2014
What is a Structured Settlement: Understanding Your Payments April 29, 2018
Structured Settlements for Seniors and Financial Stability – Structured Settlements 4Real®Blog October 5, 2018
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