Winning a huge amount of money on the lottery is something that many of us may dream of but in these modern financial times, it is rare that any winner will receive a huge amount of cash in one go, instead many of the lotteries now award an annuity. An annuity is a an agreed amount of money to be paid in regular payments over a certain amount of time and usually in the case of lottery winners, that amount of time is often the length of their life; a regular payment for as long as they live. Annuities do not have to be won though they can also be bought. They are bought by making an agreement that by paying in a certain amount of money, a regular payment is given but in these instances the number of years is specified and agreed on.
Similar to annuities are structured settlements but they are not won or bought instead they are usually awarded by a court in cases of personal injuries that have been attributed to a third person. The court will determine an amount of compensation that should be awarded and then will usually specify the terms of a structured settlement by which the compensation should be paid but once again, these will be regular payments which are made for a certain number of years.
Although anybody would be pleased to receive a regular income that a structured settlement or annuity can provide, there are those that would prefer one lump sum. The benefits of a structured settlement are perhaps obvious as it means a guaranteed income for the length of the settlement but the disadvantages are perhaps not so obvious. Although a structured settlement may sound good at the time it is awarded, as the years progress, the amount of money awarded for each payment, gradually becomes less valuable in terms of buying power and sometimes the value can devalue rather quickly, especially during a recession. This means that if one lump sum had been awarded instead, astute investing could have resulted in a higher return for the injury.
These days though, regardless of whether you have an annuity or a structured settlement, it can be bought which means you can receive a lump sum from someone who agrees to pay in return for receiving your payments. These agreements will either be for the specified length of the structured settlement original agreement or in the case of lottery winners, a set amount of years, perhaps 5 or 10. In the case of the latter, obviously if the lottery winner dies before the agreed number of years, the person that paid them the lump sum would no longer collect any payments and so have to take out insurance against that happening. The companies that buy structured settlements and annuities often offer up the agreements for investors to buy. These can be good investments as they assure any investor a regular income regardless of how their other investments may perform.