What is a Structured Settlement?

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

The Basics of Structured Settlement Annuities

Structured settlement annuities offer a secure, reliable way to manage large legal settlements, ensuring you receive periodic payments over time rather than a lump sum. This arrangement provides financial stability, making it easier to manage your finances effectively. Here’s how structured settlement annuities work and why they could be your right choice.

Key Features

  1. Guaranteed Payments: These annuities ensure you have a steady income stream, providing financial security over a specified period or for your lifetime.
  2. Customization: Payment schedules can be tailored to meet your needs, such as monthly, annually, or in lump sums at specific intervals.
  3. Tax Benefits: Payments from structured settlements are generally tax-free, enhancing their financial efficiency.

How It Works

  • Settlement Agreement: After a legal settlement or court judgment, you and the defendant agree on a structured settlement.
  • Annuity Purchase: The defendant (or their insurer) purchases an annuity from a life insurance company.
  • Periodic Payments: The insurance company makes regular payments to you according to the annuity contract terms.

Advantages

  • Financial Security: Provides a reliable income stream, protecting against the risk of spending a lump sum too quickly.
  • Customization: Payments can be designed to cover specific future needs, such as medical expenses, education, or retirement.
  • Tax-Free Income: Most structured settlement payments are exempt from federal and state taxes.

Potential Drawbacks

  • Limited Access to Funds: Once established, structured settlements offer limited flexibility in quickly accessing large sums of money.
  • Dependence on Insurance Company: The stability of the payments relies on the financial strength of the issuing insurance company.

Who Benefits?

  • Personal Injury Victims: Provides long-term financial support and security.
  • Minors: Ensures financial stability and support as they grow older.
  • Individuals with Disabilities: Offers a steady income to cover ongoing medical and living expenses.

How We Can Help

At The Annuity Expert, we understand the complexities and emotional burdens associated with managing large settlements. Our goal is to offer you peace of mind through tailored financial solutions that prioritize your needs and preferences. With over 15 years of experience as an insurance agency, annuity broker, and retirement planner, we are committed to finding the best solutions at the lowest costs.

We believe in providing personalized, thoughtful service that exceeds expectations. We fight against financial uncertainty, offering secure, structured settlements that ensure your long-term stability and well-being. We know that financial security is more than just numbers; it’s about ensuring your peace of mind and a brighter future.

Structured Settlement Annuities

What We Recommend

Step 1: Initial Consultation

  • What Happens: Contact us for a free initial consultation, during which we will discuss your financial situation, needs, and goals.
  • Main Benefit: You will receive personalized advice tailored to your unique circumstances.

Step 2: Tailored Plan Development

  • What Happens: We analyze your information and develop a customized structured settlement annuity plan.
  • Main Benefit: This plan is designed to provide long-term financial security and stability.

Step 3: Implementation and Support

  • What Happens: We help you implement the structured settlement annuity and provide ongoing support to meet your financial needs.
  • Main Benefit: You will enjoy a steady, reliable income stream and continuous support.

Features and Benefits

  • Personalized Service: Tailored plans to meet your specific needs.
    • Benefit: Ensures your unique financial goals are addressed.
  • Expert Guidance: Over 15 years of experience in insurance and retirement planning.
    • Benefit: Receive advice you can trust.
  • Tax-Free Income: Most payments are tax-exempt.
    • Benefit: Maximizes your financial efficiency.

Addressing Common Objections

  • Objection: Concern about the inflexibility of structured settlements.
    • Counter: Structured settlements are customizable and provide long-term stability, outweighing the need for immediate access to large sums.
  • Objection: Doubts about the reliability of the insurance company.
    • Counter: We only work with highly reputable insurance companies to secure your payments.

Failing to secure a structured settlement annuity can lead to financial instability and the risk of depleting your funds quickly. Without our expert guidance, you might miss out on the tax benefits and personalized financial security that structured settlements provide.

By working with us, you’ll experience peace of mind, financial stability, and a secure future. Knowing that your financial well-being is in expert hands, you’ll feel valued and supported. Contact us today for free advice or a quote and take the first step towards financial security.

Structured Settlement Annuity

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Questions From Our Readers

Why must Structured Settlements be court-approved?

The Federal Periodic Payment Settlement Act of 1982 made it mandatory for court approval on all sales of structured settlements to ensure the consumer’s best interest is put first and limit any party from taking advantage of the settlement recipient.

How are structured settlements taxed?

Regular payments from structured settlement annuities are tax-free.

Can structured settlement payments be sold?

Structured Settlements can be sold, and there is no set formula or standard for selling the payments. Reach out to us for free guidance.

What happens to a structured settlement in a divorce?

Each state divides assets in an equitable or community property approach. If the state utilizes the equitable distribution method and the settlement was obtained before marriage, the settlement probably will be kept with the settlement’s owner. However, if the state takes the community property route, the state can divide the settlement regardless of whether the settlement was received before or during the marriage.

Can a structured settlement be inherited?

Since the structured settlement annuity is an income annuity, inheritance is treated as such. If the annuity is set up for life contingent payments (life only, joint, and survivor), there is typically no death benefit. This exception would be if a guaranteed term (single or joint life with a period certain) were put into place. If the settlement is structured to pay over a guaranteed fixed period of time, the annuity can usually be inherited for the remainder of the guaranteed installments. Inherited structured settlements should still provide tax-free payments to the beneficiary. Finally, there is a commutation rider on some settlements that allows the inherited annuity to be paid out in a lump-sum payment, so check on that as well.

Which insurance companies sell structured settlement annuities?

Are structured settlement annuities protected and insured?

Structured annuity contracts are protected by your state guaranty association, in which life insurance companies must set aside a reserve to the SGA in case of company insolvency.

Can a structured settlement be changed?

Yes, a structured settlement can be changed under certain circumstances. Depending on the type of agreement, additional funds or an extension of payments may be allowed by the courts. However, any adjustments must adhere to the terms of the initial agreement.

How does a structured settlement annuity work?

A structured settlement annuity is a payment plan designed to provide long-term financial security. The payments are issued in fixed amounts over a predetermined period of time and can be customized according to an individual’s needs. This type of annuity provides guaranteed payments forever or for a certain length of time, depending on the contract. Funds from the annuity may also be invested in order to generate additional income.

Do structured settlements earn interest?

Yes, structured settlements can earn interest. Depending on the terms of the settlement, the interest rate may be fixed or variable. Generally speaking, a higher interest rate is associated with longer-term payments and a lower interest rate is associated with short-term payments. The amount of interest earned can also be affected by other factors, such as the type of investments and tax considerations.

How can I access all the money from a structured settlement?

To get a lump sum from a structured settlement, you can sell your future payments to a settlement purchasing company. However, it’s important to note that this process typically involves receiving less than the total value of the payments due to discounting by the purchasing company. Additionally, such transactions usually require court approval to ensure the sale is in your best interest.

I’m having trouble getting my structured settlement payment from a recent insurance company buyout. What should I do?

If you’re encountering difficulties in receiving payments from your structured settlement due to a recent insurance company buyout, it’s advisable to re-engage the attorney who originally managed your structured settlement. Their legal expertise can be crucial in ensuring that the terms of your settlement are honored despite the policy’s transfer to a new company. Begin by contacting the new insurance company to inquire about your payment status, ensuring that you have all the relevant settlement details and prior communications. Keep meticulous records of all interactions with the insurance company. If the issue isn’t resolved satisfactorily, consider consulting with a legal professional specializing in structured settlements or insurance disputes. Additionally, exploring options like contacting your state’s insurance commissioner or a consumer protection agency could provide further assistance. It’s important to be proactive and assertive in pursuing your payment while utilizing available legal avenues to enforce the terms of your settlement.

Do structured settlements typically include life insurance?

No, structured settlements generally do not come with life insurance.

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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