MetLife Periodic Payment Agreement, A Non Qualified Structured Settlement Solution for LTD and WC

by John Darer® CLU ChFC MSSC RSP CLTC

The Period Payment Agreement (PPA), issued by Metropolitan Tower Life Insurance Company, extends settlement solutions to certain non-qualified structured settlements. 

Defer the tax on your taxable settlement with a non qualified structured settlement

The MetLife Periodic Payment Agreement is designed to transfer the financial obligations of personal physical injury cases that are not assignable under IRC Section 130, where the annuity is a qualified funding that meets the exception to the "non-natural person rule"  set forth in IRC 72(u)(3)(C).

Examples of non-assignable personal physical injuries

Personal physical injury cases that do not qualify under IRC 130, are long term disability cases (LTD) and workers compensation cases with pre- August 5, 1997 liabilities

Exceptions to the non natural person rules in IRC 72(u) state

IRC 72(u)(3)(C)

if the annuity is a qualified funding asset (as defined in section 130(d), but without regard to whether there is a qualified assignment),

IRC 130(d)

Qualified funding asset.  For purposes of this section, the term “qualified funding asset” means

• any annuity contract issued by a company licensed to do business as an insurance company under the laws of any State, or any obligation of the United States,
  

1. such annuity contract or obligation is used by the assignee to fund periodic payments under any qualified assignment;
2. the periods of the payments under the annuity contract or obligation are reasonably related to the periodic payments under the qualified assignment, and the amount of any such payment under the contract or obligation does not exceed the periodic payment to which it relates
   such annuity contract or obligation is designated by the taxpayer (in such manner as the Secretary shall by regulations prescribe) as being taken into account under this section with respect to such qualified assignment, and
3. such annuity contract or obligation is purchased by the taxpayer not more than 60 days before the date of the qualified assignment and not later than 60 days after the date of such assignment.

Product and Market Applicability for MetLife Periodic Payment Agreement

MetLife is currently offering two versions of the Periodic Payment Agreement designed to solve the needs of different situations:

• PPA – Contingent: Provides for contingent liability as required in certain states for Worker’s Compensation cases (e.g. Texas)
• PPA – Release: Provides a full and final release and can be used for Pre-1997 Worker’s Compensation cases and Disability cases

• Minimum Premium $500
• Maximum Premium $1,500,000 [ but may take more depending on market conditions]
• Maximum Payout Period 40 years
• Maximum Issue Age  85
• Available in all 50 states, DC, Puerto Rico
• MetLife Guarantee applies to MetLife Tower Resources Group Inc. owned annuities purchased as part of of a PPA, in a similar way to regular qualified structured settlements where such a guarantee applies where MTRG is the qualified assignment company.

What are the requirements of IRC 72(u)?

Pricing limitations for this product include:
• Payments must start within 12 months of funding;  no deferred lump sums
• Must result in substantially equal payments
• Payout must be made in regularly scheduled intervals, and at least annual

This is not MetLife's first foray into the non-qualified structured settlement market.  MetLife previous wrote periodic payment reinsurance through MetLife Insurance Company of Connecticut, however that channel was ended in a corporate reorganization.  According to our sources, MetLife  has the ambition to be a player in the non qualified structured settlement space and we expect that the scope of the MetLife's Periodic Payment Agreement will be enlarged to include employment settlements as well as other cases involving taxable damages.

For claimants and attorneys alike, there is a certain comfort level dealing with a regulated legal reserve insurance company and its licensed agents, or brokers.

Founded in 1868, Metropolitan Life Insurance Company ratings at time of posting

A.M. Best     A+

S&P               AA-

Moodys        Aa3

Fitch             AA-

Other annuity based non qualified structured settlement solutions include American General Life Insurance Company, United States Life Insurance Company in the City of New York and Independent Life Insurance Company  [updated]

More information about Non Qualified Structured Settlements , or call me at 888-325-8640.