by John Darer® CLU ChFC MSSC CeFT RSP CLTC
New York judges are approving index-linked structured settlements for minors in an Infant Compromise, as part of a proposed settlement planning allocation to complement fixed rate structured settlements in the current interest rate environment. What's the attraction? Priced at approximately the rate of a structured settlement with a 2.3% COLA, index-linked structured settlement payment riders on structured settlement annuities, issued by Pacific Life and Annuity Company in New York* and Pacific Life Insurance Company elsewhere, are ideally suited for a plaintiffs with a long time horizon.
Indexed Linked Annuity Payment Adjustment riders are generally not a cost effective solution for short term structured settlements
The initial adjustment cap since the product was introduced has been 5%. That's 5% increase in payments on completion of the first year of payments , but the cost of a 2.3% COLA. If there was a down market the following year the minor's payments stay the same, averaging out to a 2.5% increase annually over the two years with the exemplar. If you are concerned about low interest rates and have the time to spread out your payments then an allocation to the index-linked structured settlement is a good alternative, as some New York judges have discovered.
The ILAPA rider can be used for plaintiffs or structured attorney fees.
*Pacific Life & Annuity Company will issue annuity policies if ANY of the following occur inside the state of New York: solicitation, sales, negotiation of settlement, court/legal action, or claimant/payee residence.
Last updated August 28, 2023