Getting a Cash Payment for Insurance Settlement is Not Always a Great Choice

Getting a cash payment for insurance settlement probably sounds like a great idea. A lot of money. You get to decide what to do with it. Cars? A new house? The best Christmas presents ever? The options are endless. But while you may wish for a lump sum of money instead of your regular monthly or annual payments, sometimes what we wish for is dangerous. Let's look at some examples.

Famous Rap Musician M.C. Hammer

Rap musician M.C. Hammer hit it huge with his top hit "U Can't Touch This" in the 1980s. Selling more than 50 million records around the world, M.C. Hammer was a rap and pop sensation who raked in millions of dollars. Hammer was a real "rags to riches" story, as they say. He was born to a modest family and had little money. But he hit it big, entering a life of cars, houses and cash. Sadly, his life went full circle as he went back to rags again after poor financial management. After falling more than 13 million dollars into debt, Hammer filed bankruptcy in 1996. He himself blamed bad priorities and poor money management for his financial fall.

Managing Money is a Challenge

If you are considering cash payment for insurance settlement plans you need to realize that managing a large sum of money can be a real challenge. Most people are not really financially knowledgeable. So, they do not know how to make good investments that allow their money to grow. Similarly, people do not realize that when you have a lump sum of money you will get the most security if you invest in such a way that you can live off the interest, never touching the original principle.

Different Strokes for Gary Coleman

Another famous example of wealth being mismanaged comes from the 1970s and 1980s child star Gary Coleman. Famous for his role as Arnold Drummond on the TV situation comedy Different Strokes, Gary worked regularly on Different Strokes from 1978 to 1986. At the height of his popularity he made a reported $100,000 an episode. However, Gary's parents, lawyers and other supervisors squandered his money, spending almost all of his 4.3 million dollar trust fund. At 21 years of age Gary sued these overseers for misusing his money; he won over a million dollars on the suit. However, just ten years later Gary filed bankruptcy on his own. For Gary, a combination of poor money management by those empowered to protect him, excessive medical bills due to his chronic health problems, and his own inability to curb his spending led to his bankruptcy.

Making Sure that You are Different

Managing money is challenging. While a cash payment for insurance settlement may seem like a great idea, it is important that you consider your own ability to manage large sums of money. With a structured settlement annuity you are guaranteed steady payments that can ensure your ability to pay your bills for the long term. While a lump sum may provide more short term gratification, structured settlement payments can provide long term security.

Does this mean that you should not consider a cash payment for insurance settlement? Of course it doesn't. What it does mean is that you need to be realistic. And, you need to have all of the information that you need to make an informed, intelligent decision. Structured settlements were designed to protect people from themselves. If you have a good reason for needing a lump sum, and you are confident that you can manage that money well, then getting a cash payment for insurance settlement may be the best decision for you. Contact us today to discuss your specific situation.

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