What is a Funding Agreement?

by John Darer® CLU ChFC MSSC CeFT® RSP CLTC

What is a Funding Agreement?

A funding agreement is a low-risk, fixed-income B2B investment that an institutional investor may purchase similar to a period certain annuity. In a funding agreement, one provides a lump sum to the issuer of the funding agreement in exchange for a predictable fixed return, often based on a recognized short term interest rate benchmark interest rate average calculated from estimates submitted by the leading banks around the world. Mutual funds and pensions often purchase funding agreements because of the certainty associated with them. Other B2B areas may lend themselves to a funding agreement solution.  Many of the same companies offering structured settlement annuities offer funding agreements through their appointed agents, however there are other providers.

Non Qualified Assignments Funded with a Funding Agreement Instead of an Annuity

Corebridge Finanicial undewriting companies American General Life Insurance Company and United States Life Insurance Company in the City of New York offer non qualified assignments with future payment obligations funding with a funding agreement " Funding Agreement Structured Settlement

For more information about funding agreements and solutions offered by 4structures.com LLC please visit Funding Agreements to Resolve B2B disputes, Environmental Clean Up, Policy Buyouts (4structures.com)

Differences Between Funding Agreement and Annuity Underwriting

• Payments for life are a possibility with an annuity, but not with a Funding Agreement. It follows that there is no medical underwriting or rated ages with funding agreements which are a possibility with structured settlement annuities.
• Financial Underwriting is required with a Funding Agreement as part of due diligence required by the issuers.

Last updated July 28, 2023