Unfortunately, some brokers or structured settlement/annuity sources will make a high offer just to get someone under contract. Then they will start making excuses and reduce the offer. Once you are under contract with a funding source, it is very difficult to back out. Even if you are able to pull out, you will have to start the whole process over again losing valuable time.

Mistake Two: Believing the funding source when they say they can close very quickly.

The time to close is mostly dictated by individual state laws, both the state the insurance company has their home office and the state where the client resides. In some states, it is possible to close in about a month. In other states, it can take as long as four months. With the rest, it is somewhere in between. Don't believe it if someone says they can close in a week or two.

Mistake Three: Not determining how much you really need and thinking you must sell the entire remainder of the structured settlement or annuity.

Why sell a $200,000 settlement when you only need $30,000? If you need additional cash sometime in the future you will be able to sell more payments or lump sums at that time. By doing it this way, you will receive more cash over time than if you sell all payments at once; and it allows you options.

Mistake Four: Letting emotions or being desperate control our decisions.

We have all gotten excited or felt desperate when faced with various situations. We could be excited about buying a home or starting a new career; or we could be feeling desperate because we are about to lose our home or are facing high medical expenses. Even though we are excited or desperate, we really must think through our decision. Some brokers or funding sources will try to take advantage of us and our situation. We should discuss our situation with a trusted family member, friend, attorney, pastor or whomever. We do not want to ruin tomorrow's financial options by making irrational decisions today.

Mistake Five: Not doing your due diligence on the structured settlement/annuity purchaser.

Call the attorney general in your residence state and the state where your funding source is located to see if there are any complaints about that funding source. If there are a lot of complaints against the source you are considering, take that as a red flag and move onto the next source. Your due diligence should be completed before agreeing to anything or signing any agreements.