by John Darer CLU ChFC CSSC RSP CLTC
The Personal Settlement Annuity is an option for settlement funds where constructive receipt has already occurred . If constructive receipt has occurred "oops" doesn't mean the "poops".
There is a solution. Not an apples to apples solution mind you, but a solution that can provide safe, secure and stable core income using structured settlement annuity pricing , which is often more favorable than traditional single premium immediate annuities (SPIA).
A Personal Settlement Annuity is only available to settling plaintiffs within a very short time after a settlement has concluded and requires a minimum of 4 annual payments. No deferred lump sums.
The premium used to fund the personal settlement annuity must come from a settlement that was for payment of damages under IRC 104 (personal physical injury).
- Unlike payments from a structured settlement for damages, a portion of the payments from a personal settlement annuity are taxable.
- Unlike a structured settlement annuity, a personal settlement annuity must comply with IRC 72(u) [ for example, in order to avoid a 10% penalty, payments must begin within 13 months, begin at or after age 59.5, ,or be spread out over the life expectancy of the annuitant]
MetLife Insurance Company of Connecticut (MICC), which originated the product, will be renamed as MetLife Insurance Company USA on November 14, 2014 and will begin selling the Personal Settelment Annuty product through agents appointed to sell the product effective Monday, November 17 , 2014 under the new company name. Initially MetLife Insurance Company USA Personal Settlement Annuity will be available in all states except New York, New Jersey, South Dakota and Oregon. MetLife, the USA's largest insurance group, which includes Metropolitan Life Insurance Company and MetLife Insurance Company USA , has underwritten over $22 billion in structured settlements. The flagship Metropolitan Life Insurance Company has been in business for over 146 years.
Whether or not a Personal Settlement Annuity makes sense will depend on an individual's needs. Other forms of non qualified income annuities may also make sense and should be explored such as deferred income annuities (DIA) and/or indexed annuities. These types of annuities may be used, among other solutions in combination, to help a settling plaintiff achieve his or her financial goals.