Jewish World Review June 15, 2000 /12 Sivan, 5760
Insurance settlement is no bargain
DEAR BRUCE: My daughter, who just turned 18, was severely injured in an automobile accident. The insurance company is offering us a structured settlement in which she would receive payments for the next 20 years. My lawyer says that this is a good deal.
My idea is that my husband and I have done very well with investments, and we can do better than the structured settlement seems to offer us. Your thoughts? -- C.T. Cleveland, Ohio
DEAR C.T.: I am on your side 100 percent. If the structured settlement is such a good deal, then why did the insurance company offer it? It is a good deal for them, not you.
If the money is going directly to your daughter, and your daughter had spendthrift tendencies, that would be another matter. But that doesn't seem to be the case here.
DEAR BRUCE: Why are you so down on CDs? I am getting 6 percent on my money and know that I will never lose. -- M.A. Dodge City, Kan.
DEAR M.A.: I am not "down on" them as such. And as a director of a bank, I suppose I should be promoting them, which would be in my own enlightened self-interest.
The fact is that if most people were to take a modest risk, their investments would outperform the CDs handsomely. Yes, the word risk is in that explanation, and if you were absolutely and positively unwilling to take any risk, then CDs or government instruments are about the only ways to go.
But with a little decent handling, you could earn two or three times the amount that the CDs are currently paying.
DEAR BRUCE: My stepson was having a tough time. He finished high school but has had a hard time holding a job, although he finally did get a pretty decent one. He came to me and asked if I would co-sign for a car, assuring me that he could make the payments with no problem.
My wife didn't put a lot of pressure on me but certainly did make it obvious that she wanted me to do this, so I did. The kid made three payments, then left for the other side of the country with the car and has not made any payments since then.
The loan company is making no great effort to look for him; they've come to me. What do I have to do to get out from under this? --N.R. Youngstown, N.Y.
DEAR N.R.: You're stuck! The reason that they loaned the money for him was because of your good credit, not his. Had you put the car in your name, I suppose there would be some advantage to you. But since the kid took off with the car, and you don't know where he is, that presents some problems as well.
People should understand that when they co-sign a loan, it's just like the money was handed over to them.
If the primary borrower goes bad, the loan company works full-time in coming after
Send your questions to JWR contributor Bruce Williams by clicking here. (Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.) Interested in buying or selling a house? Let Bruce Williams' "House Smart" be your guide. (Sales of the book help fund JWR).
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