by John Darer CLU ChFC MSSC CeFT RSP
Recently someone asked if it is possible to do a structured settlement for a settlement under $10,000. The answer is YES.
Is there a minimum size for a structured settlement? The answer depends on the annuity issuer. Structured settlement annuity issuer minimum premiums, and other useful information about structured settlement annuity companies, can be found by following this link.
The question then becomes SHOULD you consider a structured settlement for cases under $10,000?
In the opinion of this writer the answer is yes, provided you have a long enough time to defer payout. Minors can benefit from a structured settlement under this circumstance because payments are generally deferred until at least age 18 and there is a mandate for spendthrift protection. In my experience, $10,000 is less than the minimum deposit required by trust companies.
Generally, carriers build in a policy or small cases fee on small cases. This is in addition to the qualified assignment fee, if one is applicable (not all carriers have qualified assignment fees). The effect of these fees is more acute on short duration cases as well as cases the super small premiums. The tax-free status of the structure is unlikely to be a deciding factor in very small cases. Compare the net IRR of the structure against the net rate of return on bank accounts.