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How to Calculate Structured Settlement before Maturity?
One of the most sought after form of financing these days are structured settlement. Folks across the world have resorted to this special kind of financing and it is slowly and steadily gaining traction in USA, Europe and Australia. Structured settlements present the best avenue to maintain the cash flow during times of need. Suppose, if you met with an accident and the compensation is decided to be paid in premium installment options of say $ 5000 half yearly for 5 years by the insurance company. Such a long time period would leave those funds turn futile. As you canâ€™t avail them in lump-sum, they are technically useless for meeting up with long term needs like buying house, truck or say setting up a business if the accident has left you disabled. So, it is here where you can avail some companies that can help settle the score and get cash consideration in lump-sum amount against your compensation.
But the bone of contention becomes evaluating the amount that should be paid to you instantly. As you want to liquidate the amount well before the maturity period, certain basic formula has to be implemented to get to that magic figure that you want. So, to help folks calculate the compensation correctly and provide comprehensive solutions for regular cash flow, you can implement the following procedures for computing the settlement.
- When you are calculating the amount that you should receive under structured settlement, it takes into account two determinants. The first is the inflation. If you consider the inflation then the value of the money will decrease with time and therefore it has to be calculated accordingly. Secondly, if you get lump-sum cash payment then you can invest it and it can grow, however, if you tow in line with the maturity period then the value will remain the same no matter when it is paid in future. Suppose, if you were to receive 1,00,000$ as compensation from the insurance company and the insurance company has committed to pay you, say, 5000 $ per 6 months for 10 years. In that case, the 1, 00,000 $ amount will not grow even though inflation does in future. So, the actual value of the money will decline. Whereas if you are paid instantly then you can invest the amount for growth.
- In case you took an accident insurance for say 5 years and you want to redeem it. So, in that case, calculate the discount amount followed by the payment stream that is to be followed. To evaluate the aggregate payments, calculate the number of installment payments left and calculate accordingly.
Author Bio:-
The author has been dealing in mortgage notes and cash flow solutions as structured settlement funding. He has helped innumerable folks to get fast cash and maintain cash flow. For comprehensive solutions you can visit his website.
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