by John Darer CLU ChFC MSSC RSP CLTC
Structured attorney fees are a tax deferral option available to personal injury lawyers and one of several attorney fee deferral options we offer in addition to more traditional attorney fee deferred compensation. [ see my January 8, 2017 post Attorney Fee Deferral in a Settlement Planning Context For Trial Lawyers ]
Did you know that it is possible for a lawyer to get a rated age if he or she structuring attorney fees over their lifetime? A rated age is a pricing consideration for structured attorney fees, where in the opinion of the life insurance company underwriter, the attorney has a shorter than normal life expectancy, and therefore less expensive pricing can be used based on the older rated age than the actual age of the attorney.
Only Two Companies Give Rated Ages for Annuities Funding Structured Attorney Fees
AIG's structured settlement underwriting companies American General Life Insurance Company and United States Life Insurance Company in the City of New York (US Life) will consider medical documentation outlining an attorney's current medical condition and current prescriptions to provide a rated age. Whether you love or hate AIG, AIG's structured annuity issuing companies are two on a shortlist of three structured annuity issuers at this time offering medical underwriting on trial lawyers. Upon information and belief, not all structured settlement brokers/settlement planners are appointed with the two annuity issuers.
In addition to AIG, The Prudential Insurance Company of America will also consider medical documentation outlining an attorney's current medical condition and current prescriptions to provide a rated age
Structured Attorney Fees Can Address Longevity Risk
Longevity is a guessing game. A lifetime structured settlement annuity funded structured attorney fee is an option for a lawyer to address longevity risk. To the extent a trial lawyer structures a portion of his or her attorney fees over a lifetime, mortality risk can be shifted to the annuity issuer. It can be used as a financial backstop. Putting things into perspective on the topic of longevity, AIG's New York underwriting company US Life has been in business since the 1850 and Prudential since 1875 which, taking into account shifts in mortality over time, is in the realm of three normal human life expectancies!
Rated Age May or May Not Give the Best Price
As with the pricing of structured settlement annuities for plaintiffs, even with a rated age the best pricing is not a given. When calculating the cost of a particular stream of payments, the rated age is applied to the current rate series of the annuity issuer. Depending on the rated age and the rate series a company without a rated age could still be competitive.
If you would like to explore attorney fee deferral options or have any questions feel free to call me at 888-325-8640