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January 15, 2017

What is a Structured Settlement Annuity?

by John Darer® CLU ChFC MSSC CeFT® RSP CLTC

What is a structured settlement annuity?

A structured settlement annuity is a type of annuity that is used as a 'qualified funding asset', to pay periodic Structured settlement annuity 4structures 888-325-8640 payments as consideration for a release in the settlement of lawsuits.  A structured settlement annuity may include immediate or deferred payments,  payments for a fixed duration or for life, , deferred lump sum payments, payments with fixed increases, payments that adjuts based on changes in an index such as the S&P 500 or other indexes with or without a cap.  For more detail, see Types of Structured Settlement Payments | 2024 Structured Settlement Options (4structures.com)

More than one type of payment can be in a single annuity contract which makes a structured settlement annuity an ideal funding vehicle for someone who has a myriad of different needs at different times and would like a core stable income plan for the future. The measuring life, whose life is used to calculate the cost of life contingent payments, may be medically underwritten to provide a rated age. If  rated age is obtained it will reduce the cost of providing such payments with the company that has given the rated age.

Who can you get a structured settlement annuity from?

A structured settlement annuity is a regulated insurance product issued by a life insurance company and can only be placed by licensed insurance agents or brokers who authorized by the annuity issuers to offer the product..  5 companies who currently issue structured settlement annuities have been in business since the 1800s. Structured Settlement Companies | Top Structured Settlement Companies 2024 (4structures.com)

What has to happen before a structured settlement annuity is placed?

A settlement is  a negotiated compromise . A structured settlement is a negotiated compromise whereby a claimant agrees to resolve a personal injury or tort claim by receiving some part of the settlement in the form of periodic payments on an agreed schedule. As part of the negotiations, a structured settlement can be offered by the defendant or demanded by the plaintiff. A key point is that there has to be an agreement and the agreement must include periodic payments as part of the consideration for the release of liability.

How are payments from a structured settlement annuity taxed?

The taxation of structured settlement payments depends on the type of damages that the structured settlement payments represent. For workers compensation payments and for payments that represent damages for personal physical injury, physical sickness or wrongful death [i.e. excluded from gross income pursuant to IRC 104(a)(1), or IRC 104(a)(2)] payments are income tax-free. Payments for other types of damages are taxable.  A structured settlement can be purchased in a taxable damage case but payments are taxable when received by the payee. In taxable cases, the structured settlement annuity issuer will issue a 1099 to the payee for the tax year such payments are made. The important takeaway when it comes to structured settlement taxation is that it is not the structured settlement annuity that governs the taxation it is the type of damages that the annuity payments represent.

Can just anyone buy a structured settlement annuity?

No, a structured settlement annuity can only be purchased by a defendant, an insurer, a qualified assignment company, or a non qualified assignment company.  However anyone who receives payment of damages can benefit from a structured settlement annuity.

Can the court award a structured settlement annuity?

No, a court awards damages. If a structured settlement annuity is to be placed on a minor's case and certain other types of cases, a judge's approval may be necessary.

In New York, where judgements exceed certain threshold for future damages, portions of future danages are structured. 

New York Civil Practice Law and Rules Law Article 50-A (2022) - Periodic Payment of Judgments in Medical and Dental Malpractice Actions :: 2022 New York Laws :: US Codes and Statutes :: US Law :: Justia

New York Civil Practice Law and Rules Law § 5041 (2022) - Basis for Determining Judgment to Be Entered. :: 2022 New York Laws :: US Codes and Statutes :: US Law :: Justia

What is the cost of a structured settlement annuity?

A licensed insurance agent or broker who is appointed or authorized by the annuity issuer to use its software may calculate the cost of the structured settlement annuity very easily, even at a mediation, in the courthouse, in a lawyer's office, at the plaintiff's home or in a coffee shop. Sometimes a daily rate is available that is better than the software generated rate.  Licensed insurance agents and brokers who are authorized by the annuity issuer may contact the annuity issuer after a plan has been decided to see if a better daily rate can be obtained.

Last updated February 16, 2024

 

 

 

 

 

Posted at 01:09 AM in Albany New York Structured Settlements, Annuity FAQ, Bowling Green Kentucky Structured Settlements, Bridgeport Structured Settlements, Bronx New York Structured Settlements, Brooklyn New York Structured Settlements, Connecticut Settlement Planning, Conshohocken Structured Settlements, Detroit Michigan Structured Settlements, Hartford CT Structured Settlements, Lexington KY Structured Settlements, Long Island NY Structured Settlements, Missouri Structured Settlements, NC Structured Settlements, New Jersey Structured Settlements, New Orleans Louisiana Structured Settlements, New York Personal Injury, New York Structured Settlements, Newburgh Structured Settlements, NJ Structured Settlements, North Carolina Structured Settlements, Palm Beach Structured Settlements, Philadelphia PA Structured Settlements, Rhode Island Structured Settlements, Rochester Structured Settlements, Sacramento Structured Settlements, San Francisco Structured Settlements, Santa Monica Structured Settlements, Sarasota Structured Settlements, Settlements in Queens County New York, South Carolina Structured Settlements, St. Louis Structured Settlements, Structured Annuity, Structured Settlement Annuity, Structured Settlement Information, Structured Settlement Payments, Structured Settlements 101, Structured Settlements in Georgia, Structured Settlements in Illinois, Structured Settlements in Ithaca New York area, Structured Settlements in Kentucky, Structured Settlements in Louisiana, Structured Settlements in Maryland, Structured Settlements in Michigan, Structured Settlements in Nassau County, NY, Syracuse Structured Settlements, TX structured settlements, Washington Structured Settlements, White Plains Structured Settlements, WV Structured Settlements |

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Guide to Structured Settlements 2024

  • What is a Structured Settlement? What You Need to Know
    Structured settlements and what you need to know about them including a helpful introductory video featuring A.M. Best Client Recommended Structured Settlement Expert and Registered Settlement Planner John Darer of 4structures.com LLC
  • How Do Structured Settlements Work? How Structured Settlements Work
    How structured settlements work, including 4structures.com LLC's super helpful structured settlement flow chart/diagram showing how structured settlements fit in on the spectrum of settlement planning solutions.
  • Rated Ages and Structured Settlement Cost
    Rated Ages for Structured Settlement Annuities present advantages to all parties. Shift the mortality risk to a life insurance company whose business it it is to assess mortality risk to price its life insurance and annuities. Rated ages boost your structured settlement annuity benefit per premium dollar, or your yield on lifetime payments. Rated ages help to reduce the cost of funding a Medicare Set Aside arrangement where a Structured MSA, is being used { WCMSA LMSA or NFMSA].
  • Top Structured Settlement Annuity Companies 2024
    Which life insurance companies issue structured settlement annuities in 2024? A list of current structured annuity issuers, the location of their home offices and their financial ratings from A.M. Best, Moodys, Fitch, Standard & Poors and/or other Tier1 NAIC ratings, with links to their websites and other useful information. Last updated June 14, 2024
  • Treasury Funded Structured Settlements
    Treasury Funded Structured Settlements are a settlement option for the most conservative using the OTHER permissible qualified funding asset under IRC 130(d), United States Treasury Bonds in addition to, or instead of, structured settlement annuities. Treasury Funded Structured Settlements can also be used to fund installment sales, also known as structured sales and other non qualified structured settlements.
  • Compare Structured Settlement IRR to Other Settlement Alternatives
    Use the Taxable Equivalent Yield chart to help compare the Internal Rate of Return (IRR) of a structured settlement to other alternative or complementary investments. Need help with the chart? Call 4structures.com® LLC at 888-325-8640
  • Structured Settlement Payments | Types of Structured Settlements 2024
    Ways You Can Structure Your Settlement Payments in 2024. With a structured settlement you can have more than one type of payment in a single contract. Different types of structured settlement payments can be customized and combined to meet your needs on a stand-alone basis, or in conjunction with other financial products. Diversify your structured settlement, if you wish, by funding with more than one annuity issuer, with treasury funded structured settlements, index linked structured settlement payments and market based structured .
  • Structured Attorney Fees for Tax Deferral for Attorney Contingency Fees
    Structured attorney fees is a financial strategy that offers a unique way to defer taxes for lawyers and law firms. Lawyers CAN structure their legal fees even if the plaintiff doesn't structure their settlement. There are multiple ways to structure your attorney fees, such as capped or uncapped index linked structured settlement annuities where payments are adjusted based on upside changes in the S&P 500 or another index, Trial Lawyers may also use a special deferred pay/deferred compensation arrangement, if market based returns returns are desired with no cap. Plan NOW for year end! Put structured attorney fee expert John Darer® on your settlement planning team in 2024.
  • Structured Settlement Annuity Company Customer Service Phone Numbers
    Receiving structured settlement payments from your own structured settlement or inherited structured settlement? You'll like this huge time saver. Click the title for a link to a comprehensive list of customer service telephone numbers that includes both current AND former structured settlement annuity issuers and reinsurers. If you have simple bank or beneficiary changes, or if the insurance company that issued the structured annuity has merged, sold or spun off its block of structured annuity business (e.g. Aviva, Allstate, Transamerica, AEGON, GE Capital, Liberty, CNA, Confederation Life), oran annuity issuer has changed its name and you're trying to track them down. Here you go! The list is regularly updated. Last updated May 20, 2024.
  • Structured Settlement Quote Lock-Ins | What You Need To Know
    What does a Structured Settlement Lock-In Mean? How do plaintiffs, defendants and insurers benefit from a structured settlement quote lock in when finalizing a settlement? How does the defendant/insurer/court benefit from using a structured settlement lock-in? Where to be careful when using structured settlement lock ins.
  • What Are Structured Settlement Annuities?
    Structured settlement annuities are annuities that can provide one or more customized annuity payment streams in a single contract. Read about structured settlement annuities here.
  • History of Structured Settlements
    Tracing the roots of structured settlements history from 1918, when Congress exempted damages for personal injury or sickness from income tax, to the establishment of structured settlements as a core personal injury settlement planning tool to the present day.
  • What Are Market Based Structured Settlements?
    Market based structured settlements are an alternative or supplementary structured settlement solution for the plaintiff, attorney or law firm that: 1. Can afford to take some market risk 2. Have discretionary settlement dollars. Claimants and attorneys alike may find that market-based structured settlements provide the opportunity to receive tax-free income, or tax-deferred income, while enjoying growth potential.
  • iStructure |Uncapped Fixed Index Structured Settlement Annuity
    iStructure is an innovative game changing fixed index structured settlement annuity for plaintiffs or attorneys. with an intermediate to long term horizon
  • Structured Settlements and Longevity Risk| What Are the Odds?
    Do your financial resources give you enough road, or will the road run out before you do? A structured settlement annuity helps mitigate the risk of outliving your savings, no matter how long you live. A structured settlement can include one or more customized payment streams and types.

Qualified Settlement Funds

  • What is a Qualified Settlement Fund?
    Qualified Settlement Funds | What You Need to Know
  • Firmwide Qualified Settlement Funds Debunked
    Firmwide qualified settlement funds have been heavily promoted to trial lawyers, but have been debunked in a detailed analysis in a July 2022 legal opinion a tax partner at the law firm of Faegre Drinker Biddle & Reath, LLP. Trial lawyers and firms who have established Firmwide QSFs or coinsidering establishing a Firmwide QSF should read the analysis as part of their evaluation.

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    with a stable readership that seeks credible structured settlement information, John Darer Reviews, commentary and/or opinion about topical issues related to settlement planning, targeted to lawyers, injured persons and their family members, guardians, survivors, judges, magistrates, special masters, mediators, administrators, trust companies, insurance company executives and adjusters, financial advisers, settlement professionals, financial professionals, insurance regulators, government leaders, federal and state law enforcement, buyers and sellers of structured settlement payment rights, the news media and other interested parties. 4structures.com LLC established this structured settlement blog in 2005. John Darer ®, CLU ChFC MSSC CeFT® RSP CLTC, President of 4structures.com, located in Stamford, CT 06902. John Darer is an experienced New York City area structured settlement expert, structured settlement broker, Certified Financial Transitionist, and Registered Settlement Planner. He holds insurance licenses in 45 states, has 41 years financial services experience and 31 years in the structured settlements and settlement planning space. In his capacity as a investigative journalist and commentator, and professionally, John Darer passionately believes that shining the light on a business practice is both healthy and newsworthy. It is in the best interest of injury victims, their families and their legal advisers, that the settlement planning discussion involve those that are properly trained in the topic, properly informed on the topic and, with respect to structured settlements, properly licensed and/or appointed. It has significant instructional and deterrent value to other practitioners and firms as well as those who may be caught in the cross hairs. WHAT YOU GET here is the straight stuff with a touch of irreverence and humor. We hope you enjoy and find the content to be helpful. Subscribe to the structured settlement blog feed, or a specific category feed through your blog reader, or through the Subscribe button at the top left of this page. Followers of JDDarer™ on Twitter may also receive select content. If you would like to speak with John he can be reached at (888)325-8640 Thank you for reading! Last updated July 10, 2024

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Structured Settlement Best Practices Corner

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Why Take a Structured Settlement?

  • A structured settlement offers guaranteed financial security to personal injury victims, wrongful death survivors and their families. A structured settlement involves a customized stream of payments, provides long-term stable tax-free income, for a period of years or a lifetime. Unlike other income annuities. a structured settlement annuity can have multiple payment streams to address multiple needs in a single contract.

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