Guaranteed versus Non Guaranteed Payments

Hi everyone.  J.G. Wentworth here. 

You know, most structured settlements and annuities have more features than their recipients realize.  I think it’s critically important that, if you own a structured settlement or annuity, you take some time to understand its features. 

For instance, many structured settlements and annuities have guaranteed and non-guaranteed payments.  Guaranteed payments are those that your estate will continue to receive should you die during the guarantee period.  Non-guaranteed payments are payments that you will receive as long as you are alive, but will cease when you die. 

So for example, let’s say you are 21 and you are to receive $1,000 per month for the rest of your life guaranteed to age 50.  If you die at age 40, your estate will continue to receive the $1,000 monthly payment for another 10 years.  If you die at age 55 – five years after the guarantee period ends – they monthly payments would stop immediately. 

Why does this matter?  Because if you are selling payments, the non-guaranteed ones are likely to be worth less, and may be difficult to sell.  The guaranteed payments, on the other hand tend to be more marketable.  Knowing the composition of your payments is important, because it will help you understand how much you can raise from your structured settlement or annuity when you need cash. 

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