Pension or settlement income streams, also known as pension loans, have been in the news lately. Which of the following have federal officials warned is a risk of pension loans?
|The lump sum offered by the buyer is typically substantially less than the seller would receive over time, if he or she opted not to sell.||2||3%|
|Transaction costs—including brokerage commissions, legal and notary fees, and administrative charges—can be high.||1||1%|
|Sellers may be required to purchase a life insurance policy and name the factoring company, or the investor buying the income stream, as the beneficiary of the policy.||0||0%|
|Some salespeople can be aggressive or persuasive when trying to get you to sell your income stream and, in some cases, there may be outright fraud.||0||0%|
|All of the above.||76||96%|
|Total number of votes:||79||100%|
The correct answer is “All of the above.“
News articles and other published materials on pension or settlement income streams, also known as pension loans, report that not all offers are legal, and some contain hidden costs.
Individuals who are thinking about selling the rights to their pensions should consider the value of the lump-sum payment compared to the future income stream.