by John Darer CLU ChFC MSSC CeFT RSP CLTC
What is a Structured Settlement Annuity?
- A structured settlement annuity is insurance product that (1) can provide multiple payment streams, as well as (2) different types of structured settlement payments, in a single annuity contract that can be customized to a person's needs.
- A structured settlement annuity is often (but not exclusively) used as a "qualified funding asset", as the latter term is defined by IRC 130(d).
What is a Qualified Funding Asset?
Examples of Where a Structured Settlement Annuity Would Not Be Used as a Qualified Funding Asset
Examples of What is NOT a Structured Settlement Annuity
- Acquired structured settlement payment rights (the rights to someone else's structured settlement). See the National Association of Insurance Commissioners' statutory issue paper No. 160, issued April 6, 2019. Plaintiffs, Counsel, Guardians Ad Litem, Probate and Surrogate judges and investors, should be leery of any attempt by a settlement planner or financial adviser to pass off the direct or indirect acquisition of factored structured settlement payment streams as a structured settlement annuity. Such unregulated products carry higher risks than structured settlement annuities and may not have the same statutory protections.
- A retail single premium immediate annuity is an annuity, but it is not a structured settlement annuity
- A retail single premium deferred annuity is an annuity, but it is not a structured settlement annuity
- A retail deferred index annuity is an annuity, but it is not a structured settlement annuity
- A retail fixed index annuity is an annuity, but it is not a structured settlement annuity
None of these becomes a structured settlement annuity just because it is owned by an independent assignment company.
What Do Structured Settlement Annuity Issuers Say?
A quick survey of insurance companies underwriting structured settlement annuities shows that about half of them specifically identify with structured settlements. Not a single one would sell a structured settlement annuity to an independent assignment company.
1. The Prudential Insurance Company of America
Single Premium Structured Settlement Annuity Certificate
2. Pacific Life Insurance Company/ Pacific Life and Annuity Company (New York)
Single Premium Settlement Annuity
3. USAA Life Insurance Company
Single Premium Immediate Annuity (For Use as a Funding Asset in Structured Settlement Assignments)
4. New York Life Insurance Company
Lists Plan as Structured Settlement on contract
Others do not.
Would any structured settlement annuity issuer sell a structured settlement annuity to an independent assignment company?
None of the structured settlement annuity issuers that we canvassed for this post on November 2, 2021 would sell a structured settlement annuity to an independent assignment company.
With one exception, Qualified Assignment fees will not be over $750 for a true structured settlement annuity
You may find some independent assignment companies charging higher fees, perhaps even asset based qualified assignment fees that are a significant multiples of what the insurance company subsidiary qualified assignment companies charge.
Last updated August 19, 2023