by John Darer® CLU ChFC MSSC RSP CLTC
This week a New York medical malpractice attorney related to another claimant, with me on the phone, something that was extremely gratifying. It comes under the heading of "you know this stuff really works!" It does.
The New York medical malpractice attorney had recently heard very positive feedback from another client of the attorney for whose daughter I put together a comprehensive settlement plan 14 years ago, in 1999.
The attorney's client's daughter had suffered a serious neurological injury. The 1999 settlement plan approved by the presiding judge included , among other things, a supplemental needs trust, permanent life insurance on both parents/caregivers, and a diversified structured settlement portfolio with COLAs. The structured settlement obligations were ultimately guaranteed, respectively, by a surety bond from Allstate Insurance Company (for part) and a corporate guarantee from GE Capital Corporation (for another part) which yielded an average of 7.62% income tax free! [Those were the days my friends, and they'll be back again... ]
I might add that the case was resolved and all the attendant settlement planning was completed without a qualified settlement fund.
The mother of the child is grateful for the stable income that the structured settlement provides to help with her daughter's care. The NY personal injury attorney related how the young parents I worked with in 1999 are now divorced.. The life insurance is owned by a trust and a portion of the structure provides for an annual payment to assure that there are always sufficent funds to pay for the level life insurance premiums. Permanent life insurance was selected over term insurance because the parents were young, resources were available and we simply could not risk an insurability issue with either of the parents at the end of the term guarantee period.
Permanent insurance may also a good insurance policy in some settlement planning situations to assure the continuance of the intended plan, in the event of the divorce of parent/caregivers of a severely impaired child or adult. Each situation must be evaluated on its own individual facts and circumstances. It is however possible that having a child with a severe disability can also drive families apart or into a state of chronic stress or crisis. In the case in question we underwrote the parents for life insurance at a young and healthy age and the premiums stay level. The divorce has no effect on the life insurance, as the premiums are paid for by the trustee from the child's account. There is no need for acrimony with the ex-spouse on the issue, or for either spouse to spend additional legal fees litigating the issue of life insurance at the end of a term guarantee period, for reentry underwriting, or risking a large balloon in term insurance premiums to keep the overage thereafter if unable to get that completed.