Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews

Best Dating Practices for Structured Attorney Fees and Non Qualified Structured Settlements

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Your "dating habits" can get you into trouble when establishing structured attorney fee programs and attorney fee deferred compensation programs and structured settlements for taxable damages 

Settlement agreements are contracts that obligate payment be made on a certain date. In most cases that obligation is shifted to a qualified assignment company, which purchases an annuity to fund that periodicpayment obligation to payment on a certain date. But what if it comes in early?  

Avoid the agita! of payments being deposited in your account, arriving before the end of the year, in the end of the year rush, instead of after January 1. 

Good "dating habits" for taxable damages payments

Consider using a starting payment date at least 10 business days into January, when settlement documents are drafted. 

You may also want to consider inserting language in the settlement documents that addresss when the payment date is not a business day (i.e. if the payment date is on a holiday or a weekend) that payments will be made on the next business day. 

Be mindful that where January 1st (New Year's Day) comes on Monday, as it did in 2024, the preceding days are a weekend and the week before is a short week (with Christmas also on a Monday) with many on vacation and the Friday before January 1st is a half day for many, day that insurers or other payment providers may release payments early in an effort to meet their conatrctual obligations.

Pay Extra Attention to Payment Dates on These Types of Settlements

What are Non Qualified Structured Settlements and Non Qualified Assignments for Tax Deferral (4structures.com)

Structured Attorney Fees and Attorney Fee Deferral Experts | 4structures.com LLC

Last updated January 12, 2024

 

 

 

Can a Structured Settlement Annuity Be Sold?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

A structured settlement annuity cannot be sold.  Individuals with structured settlements do not own the annuities that fund their structured settlements. They cannot sell what they do not own. Structured settlement annuities are generally owned by qualified assignment companies or non qualified assignment companies. In the less common so-called buy and hold cases, the buying and the holding is by the Defendant or insurance company.

But Annuty Expert Advice Said I Could Sell My Structured Settlement Annuity? 

Shawn Plummer, the proprietor of Annuity Expert Advice, has won the Canard of the Week multiple times for just this sort of "fupped duck" answer. 

 

"Can I sell my structured settlement annuity to a third party without the court being involved? No, in most cases, the court must be involved when selling a structured settlement annuity. This is because you must first obtain court approval to sell your settlement payments legally".

 

Plummer's answer is wrong on the fundamentals.

• As previously stated if you are receiving structured settlement payments you don't own the structured settlement annuity. 
• A Court cannot order or approve you selling something you don't own
• A Court must be involved only when you are attempting to sell structured settlement payment rights

If that's what Plummer meant why all the muddled words?

We can all have a little laugh at a meme of a blow up duck to drive home a point, because when it comes to structured settlement annuity ownership, Plummer is simply providing misinformation on the subject. I don't think it is intentional. Plummer is simply not a structured settlement annuity expert, he's an annuity content creator. Plummer appears to have no professional credentials for structured settlements at the time of publishing.

 

Structured Settlement Annuities Close to ALL TIME RECORD in 2022 Primary Market Production

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Structured settlement annuities had a RECORD 4th quarter of 2022, as increasing awareness of rising interest rates looking good against a volatile stock market, plummeting crypto and hard work by industry members, catapulted industry production to close to its all time record achieved in 2019. 

The structured settlement primary market produced  $779.5M in December 2022 to end Q4 2022 with $2.075B in production. The total for 2022 was $6,037,899,790 according to industry sources.  The number does not included non qualified strucured settlement products.

1. The industry placed $2,090,161,453 of premium in Q4 totaling $6,037,899,790 for the year.

·        This represents an increase of $939,304,942 or +81.6% Q4 YOY

·        YTD this represents an increase of $1,807,552,714 or +42.7%

2. Industry case count totaled 5,979 in Q4, totaling 21,341 for the year.

·        This represents an increase of 1,526 cases or +34.3% Q4 YOY

·        YTD this represents an increase of 1,843 cases or +9.5%

3. Average case size was $349,584 in Q4, averaging $282,925 for the year.

·        This represents an increase of $91,139 per case or +35.3% Q4 YOY

·        YTD this represents an increase of $65,961 per case or +30.4%

How Structured Settlement Industry Was Affected in Covid Era

Despite a return to structured settlement production highwater mark to the north of $6B in 2018 and the all-time record in 2019, the  rapid deceleration in interest rates in the early part of the Covid-19 pandemic, together with court closures that constricted the supply line of cases coming up for trial, played a role in the drop in structured settlement industry wide production.  

Last updated February 19, 2023

Structured Settlement Annuities Are Not Tax-Free Insurance Contracts | Wait! What?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Tax-Free Structured Settlement Annuity |  No Such Thing

John Darer reviews the term "Tax Free Structured Settlement Annuity", which you may encounter on the Internet. Be mindful that there is no such thing as a Tax Free Structured Settlement Annuity. 

Don't worry annuitants, there IS a tax exemption, but not exactly the way it's being presented in many cases by competent settlement practitioners and reputable settlement companies that should know better. Please read on for clarification of what is tax-free.

Examples:

• One settlement planner's website says "Structured settlement annuities are not taxable — they're completely tax-exempt"
• Another settlement planner's website says "Tax-free Income: 100% of structured settlement annuity is tax-free – including the settlement award, principal, ongoing payments and interest earned".
• "a tax-free structured settlement annuity to meet medical and living expenses, or other financial planning tactics".
• "A tax-free structured settlement annuity qualifies for special tax treatment under IRC §§104(a)(2) and 130(c)"
• "A claimant cannot accept a cash settlement and then purchase an income tax-free structured settlement annuity on his/her own"
• The best time to start preparing for your financial future is right now. Consider the many advantages of a Tax-Free Structured Settlement Annuity.*"
• " I work with the Tax Free Structured Settlement Annuity Product and Various Trust products"
  

What Damages the Structured Settlement Payments Represent is The Key

While some of the incorrect statements by some settlement planners may seem plausible, it is the nature of damages that the structured settlement payments represent that is a critical factor, not the structured settlement annuity contract itself. 

Think about the applicable tax code sections cited in every settlement agreement that involves a structure.  The word "annuity" does not appear in IRC Sections 104(a)(2) or IRC 130(c). 

"Annuity" appears in IRC 130(d), which  provides the requirements an annuity must meet to qualify as a qualified funding asset, including the requirements that (i) the periods of the payments under the
annuity contract are reasonably related to the periodic payments under the qualified
assignment, and (ii) the amount of any such payment under the contract does not
exceed the periodic payment to which it relates.

Furthermore, a structured settlement annuity is a versatile insurance contract that can be used for a variety of applications, including structured settlements being used as a funding vehicle for settlements involving periodic payment of taxable damages and structured installment sales. 

I encourage my industry colleagues to take greater responsibility, hopefully with the recognition that inaccurate statements end up getting parroted or cited by others.

See my comprehensive write up on Settlement News Network What's a "Tax-Free Structured Settlement Annuity"? (4structures.com)

Please note that other factors may apply such as avoiding constructive receipt.Constructive Receipt is Game Over for Structured Settlements (4structures.com)

Last updated April 2, 2025  

Are Structured Settlement Annuities Taxable? It's All About The Damages

by John Darer CLU ChFC MSSC CeFT RSP CLTC

“Is a structured settlement annuity taxable? And is the initial amount that I get from the settlement taxable?”

Asked by a rhetorical question posed by a settlement planning firm.

Here is their response:

"If the origin of the claim is based on a personal physical injury, Section 104[a][2] of the Internal Revenue Code states that the initial principal amount on the settlement that the client receives is not taxable. It is tax-exempt at the state, local, and federal levels. however, if the client decides to invest their settlement funds, then the interest that grows from the investment is taxable. One way to avoid this is to establish a structured settlement annuity for the client to receive their settlement funds. All of the interests (sic) that grow inside of the structured annuity will also be tax-exempt. Payments received from a structured settlement annuity do not need to be reported on any tax return form (1040) or any tax document. Both the principal amount and interests (sic) in the annuity are completely tax exempt".

Here's the thing...

1. The Internal Revenue Code is Federal tax code. While there may be state and local tax laws that are modeled after federal tax law, those are the dominion of the individual states or local governments and their respective departments of revenue. 
2. IRC Section 104 (a)(2) permits a taxpayer to exclude from gross income "the amount of any damages (other than punitive damages) received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal injuries or physical sickness" Source: Internal Revenue Service irs.gov

Key Structured Settlement Takeaway

The key take away is that under IRC 104(a)(2) it is the damages are tax exempt not the annuity

With a properly established structured settlement, that starts with an obligation to make future periodic payments as damages on account of personal physical injury, where the obligation is generally assigned by way of a qualified assignment, and then funded with a structured settlement annuity or structured settlement annuities as a qualified funding asset, each of the future payments is tax exempt.

Taxes and Structured Settlements. It's All About the Damages!

 

Last updated May 11, 2024

Prudential Suspends Structured Settlement Rate Book Pricing Due to Extreme Rate Volatility

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Due to extreme interest rate volatility with a looming pandemic, Prudential Insurance Company of America has announced that it has suspended its structured settlement rate book pricing until further notice, effective March 6, 2020.

Prudential ad from 1909   Image: Wikipedia

What Does This Affect?

Just new structured settlement quotes from Prudential from March 6, 2020.  

Why is This Necessary?

Insurers must have assets to match against liabilities under state insurance regulations.  Large volumes of business coming in under book rates present challenges that are increasingly difficult to manage when rates are shifting at warp speed.  It is actually smart risk management on the part of Prudential.

Is This Unusual?

Not at all, Berkshire Hathaway Life of Nebraska and First Berkshire Hathaway Life do not have a published rate book and use daily price quotes for everything.  Berkshire is usually there or thereabouts at the top of the production ladder for structured settlement annuity issuers along with others.

How long has Prudential Been in Business?

The Prudential Insurance Company of America  (PICA), based in Newark, New Jersey,  has been in business since 1875. 

As of September 30, 2019 PICA had $1.5 trillion is assets under management, $286 billion in admitted assets and approximately $4 trillion in life insurance in force worldwide. In January 2020 Prudential Financial was ranked the most admired life insurance company in the world by Fortune Magazine for the second consecutive year. As of year end 2018 it had over $831 Billon in assets.

 

 

 

What is A Structured Settlement Broker? Structured Settlement Broker 2025

by John Darer CLU ChFC MSSC CeFT RSP CLTC

What is a Broker?

A broker is a person who serves as a trusted agent or intermediary in commercial negotiations or transactions. Brokers are usually licensed professionals in fields where specialized knowledge is required, such as insurance, finance and real estate.

A broker's rate of compensation (called brokerage or commission) is determined according to custom of the particular trade or by law, and is computed commonly either as a fixed percentage of the value of the transaction or on a sliding scale (higher the value, lower the percentage or the reverse).

What is a Structured Settlement Broker?

A structured settlement broker is someone that holds at least an active life insurance license in one or more states and carrier appointments, who provides professional advice and places structured settlement annuities and other qualified funding assets. Structured settlement brokers may hold other professional licenses and provide settlement planning advice and placement of financial vehicles pursuant to their professional licenses.

Contact a Structured Settlement Broker Now!

How is a Structured Settlement Broker Compensated?

A structured settlement broker is paid by commission, either as a licensed and appointed agent of a life insurance company and/or as a licensed broker or producer. In a letter posted on the website of the New York Department of Financial Services, the Office of General Counsel opined that it would be unlawful for a licensed broker to pay a licensed agent who was not appointed by the annuity issuer.

Who Regulates Structured Settlement Brokers?

As a licensed insurance agent, licensed broker or producer, a structured settlement broker who places structured settlement annuities as part of the consideration for the release of legal claims, is regulated by the  laws of the states in which he/she/they are licensed. The states control the sales and solicitation process and have the power to fine, suspend or revoke licenses. The annuity issuer can pull appointments as well.

What is a structured settlement annuity?

A structured settlement annuity is a contract issued by a life insurance company,  the primary use of which is as a qualified funding asset to fund obligations to pay future periodic payment obligations under a settlement agreement and pursuant to a qualified assignment agreement.  Qualified assignment agreements are governed by the rules set forth in IRC Section 130.  In rare circumstances, where are future periodic payment obligations are unassigned, the structured settlement annuity may be owned by the Defendant or its insurer.  Structured settlement annuities can only be placed by individuals and entities (1) holding an active life insurance license and (2) appointed/authorized by the annuity issuer for structured settlement annuities. Read more about structured settlement annuities 

Can a structured settlement annuity be sold?

No, a structured settlement annuity cannot be sold. A structured settlement annuity purchased as a qualified asset is owned by a qualified assignment company. The terms of the settlement agreement when the structured settlement was established do not grant the annuitant any ownership interest in the annuity contract. Only the rights to the structured settlement payments may be sold, subject to the structured settlement protection act in the state of domicile.

Is JG Wentworth a Structured Settlement Broker?

No, simply buying an expensive Google paid ad does not make an individual or company a structured settlement broker.   It has been observed that JG Wentworth also uses the term structured settlement consultant in its Google paid ads for JG Wentworth or its other entities that buy people's structured settlement payment rights for pennies on the dollar. 

Last updated April 20, 2025

 

Who Owns a Structured Settlement Annuity?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Who Owns a Structured Settlement Annuity?

The majority of structured settlement annuities are owned by qualified assignment companies not the payees of the structured settlement.  The structured settlement annuities are purchased as a qualified funding asset subject to the terms of IRC 130(d). All structured settlement annuities used to fund taxable damages or attorney fees purchased are purchased by a non-qualified assignment company as part of a non-qualified assignment. As such they may be owned by a company specializing in non-qualified assignments.

A case in point would be American General Life Insurance Company and United States Life Insurance Company in the City of New York, subsidiaries of Corebridge Financial (formerly AIG Life & Retirement), which use AGL Assignment Company LLC for non qualified assignments. Where a qualified assignment is to be utilized, American General Annuity Services Corporation is the qualified assignment company. Another example is Independent LIfe Insurance Company which uses different assignment companies for qualfied and non-qaualified assignments,

In the case of MetLife Assignment Company, Inc, MetLife's assignment company owns structured settlement annuities funding both tax-exempt and taxable damages. 

Merchants of Factored Structured Settlement Payment Rights/Receivables Often Get It Wrong

Merchants of factored structured settlement payment rights mislabel factored structured settlement payment rights to prospective investors and to financial advisors, who may then market the mislabeled receivables to investors incorrectly as annuities.

Immediate Annuities (Dot) Com, a New Jersey broker of structured settlement payments and one of several companies that conducts such business using the debunked label  Secondary Market Annuity, which is not an annuity at all.  

Immediate Annuities (dot) com states, inaccurately, that  "A Secondary Market Annuity (also called an 'SMA') refers to a transaction in which the current owner of an income annuity sells his future income steam to a third-party in exchange for a lump-sum payment. Annuity income streams most commonly originate from lawsuit settlements, lottery winnings, or immediate annuities".

Immediate Annuities (dot ) com is not correct because it inaccurately suggests that a structured settlement payee is the owner of the income annuity funding a structured settlement. In fact, nothing could be further from the truth when it comes to structured settlement ownership.

It's hard to believe that Immediateannuities.com continues to use the debunked term "Secondary Market Annuity" or its plural "Secondary Market Annuities" when

1. The National Association of Insurance Commissioners does not recognize acquired structured settlement payment rights as annuities or insurance product.  See Statutory Issue Paper No. 160, which was finalized April 6, 2019.
2. There is no protection for investors in the event of insolvency in the 37 states that have adopted the 2017 Revisions to the Life & Health Guaranty Associations Model Act (#520). Investors should not feel comfortable in the 13 states that have yet to adopt, because the Model Act has a reach back provision that applies to such acqusitions before or after the adoption of the 2017 Revisions in a state.
3. Past and ongoing litigation that in some cases HAS resulted, and in pending cases MAY result in losses for investors in structured settlement payment rights. 

Pay Attention to the Settlement Agreement and Release!

• A settlement agreement establishing the structured settlement will expressly state that the assignment company has all rights of ownership of the annuity.
• The structured settlement payee only owns the right to receive the periodic payments from a structured settlement as part of the consideration for a release of liability.
• The payee does not own the structured settlement annuity.
• It is the structured settlement payment rights that are transferable as long as the transaction complies with state and Federal law.

Last updated January 30, 2024

 

MetLife's US Domiciled Non Qualified Structured Settlement Option

by John Darer CLU ChFC MSSC CeFT RSP CLTC

MetLife will offer a US domiciled non qualified structured settlement option for employment, environmental, breach of contract and other types of taxable damages in early 2018. The underwriting company will be Metropolitan Tower Life Insurance Company. Full details to follow during the roll out which expected in or about mid-January 2018.

Metropolitan Tower Life Insurance Company Structured Settlements

MetLife announced on May 3, 2017 that Metropolitan Tower Life Insurance Company  ("MetLife Tower Life"), a Delaware company and wholly owned subsidiary, would become the primary underwriting company for structured settlement annuities.  Metropolitan Tower Life was the successor-in-interest to Metropolitan Insurance and Annuity Company ("MIAC)" that was the qualified assignment company used by MetLife structured settlements  until about 13 years ago. At the time it was announced April 26, 2005, MetLife stated that "structured settlement annuities in-force and/or issued prior to December 1, 2004 are the responsibility of Metropolitan Tower Life Insurance Company", which held an A+(Superior) rating from A.M. Best as it does today, with a current size category XV.  The company is rated Aa3 (High Quality) by Moodys.

Under the qualified assignment program, MetLife Assignment Company Inc., (MACI) is the qualified assignment company.  Upon information and belief the MACI facility will be expanded to take on non qualified structured settlement cases. The periodic payment obligations assigned MACI are guaranteed by Met Tower Life under an Evidence of Guarantee.  With $4B+ in assets, Metropolitan Tower Life is a considerably smaller underwriting company in terms of assets than Metropolitan Life Insurance Company. It does however have a strong surplus position of 16.5% of general account assets and a Comdex rating of 96, that exceeds Metropolitan Life Insurance Company  [Source: Vital Signs].  

Read more about Non Qualified Structured Settlements |  Using Structured Settlements to Help Resolve Taxable Damage Lawsuits

 

Independent Life Insurance Company | New Insurer Only Issues Structured Settlement Annuities

by John Darer ® CLU ChFC MSSC CeFT ® RSP CLTC

Independent Life Insurance Company is a new structured settlement annuity provider, in creation for four years, that has been designed with valuable input from structured settlement industry leaders.

Introducing a new structured settlement annuity issuer run by seasoned professionals

Independent Life Insurance Company is exclusively focused on providing annuities for the structured settlement market.

As a newly formed and capitalized life insurance company, Independent Life does not have legacy structured settlement annuities on its books with pricing out of alignment with today’s low investment environment, factors which contributed to certain companies leaving the structured settlement marketplace in the last decade.

A formal announcement will be made in San Antonio during the Fall Meeting of the National Structured Settlements Trade Association the week of October 18, 2017 with an opportunity to meet the Independent Life executive team:

• James D. Atkins, Chief Executive Officer 
  
• Donald J. Herrema, Chief Investment Officer
• Daniel P. Durbin, VP of Marketing and Sales
• Patrick J. Hindert, VP of Business Development

Independent Life's structured settlement value proposition

• Annuities only for the structured settlement market
• Comprehensive medical underwriting for qualifying cases
• Competitive upper-tier pricing
• Unparalleled service and support
• Ongoing financial support for broker and planner initiatives that promote the growth of our industry for the benefit of all stakeholders
• An executive team with previous structured settlement experience totaling over 100 years in marketing, sales, training, and annuity pricing
• Domiciled in a major state with an excellent regulatory reputation

Who is James D. Atkins?

James D. Atkins is the Chief Executive Officer of the Independent Life Insurance Company. Atkins is the former CEO of Legal & General America. Prior to this position Atkins spent 25 years under the GE Financial Services umbrella (First Colony Life Insurance, GE Financial Assurance, and Genworth). During this time he acted in a variety of capacities including the roles of Chief Actuary and Capital Markets Leader. When he joined First Colony it was new in a fledgling structured settlement niche. During his tenure First Colony became one of the largest writers of structured settlement annuities. At its peak First Colony managed in excess of $10 Billion of Structured Settlement contracts. Atkins has broad relationships with the leading reinsurance companies active in the U.S. market and is an experienced insurance company  executive.

Who is Donald J. Herrema?

Donald J. Herrema is the Vice Chairman and Chief Investment Officer for Independent Life. Mr. Herrema held a variety of senior leadership positions including being CEO of several, in asset and wealth management, banking, mutual funds, banking and real estate. He began his career at Wells Fargo Bank in his native California, rising through the ranks to become President of Wells Fargo Securities and Head of Mutual Funds. Moving to New York City, Don joined Bessemer Trust, becoming COO and then CEO, leading a period of strong growth in revenues and profitability. Later, he was the Founder, Chairman and CEO of Atlantic Trust, now a subsidiary of CIBC (Canada). Additionally, Don served as Managing Director and Head of Private Wealth Management at Morgan Stanley. He culminated his active working career as Executive Vice Chairman of Kennedy Wilson, a NYSE listed global real estate firm.

Mr. Herrema's Director and Advisor roles include being Independent Chair and Director of TD Bank's US Mutual Funds, Independent Director of AbelNoser Holdings LLC., Independent Director of Lepercq, de Neuflize (both New York City and Luxembourg), Advisor to the Board of Fund Evaluation Group, Senior Advisor at Stone Point Capital, Past President of the Bank Securities Association, Independent Director of Cedars Bank, and an Advisory Board member of Education Equity and NYPPEX.  [ Source:  LInkedin]

Who is Patrick J. Hindert?

Patrick J. Hindert is Vice President of Business Development for Independent Life. Hindert has been a leader in the structured settlement industry since 1977. He previously served as President of Benefit Designs, a national structured settlement intermediary, which he owned and managed for 22 years. He has also served as President of the National Structured Settlement Trade Association (NSSTA) and as Executive Director of the Society of Settlement Planners (SSP). Hindert is co-author of Structured Settlement and Periodic Payment Judgments, a legal treatise updated semi-annually since 1986, which is utilized by NSSTA and SSP in their certification programs. Hindert previously authored the blog “Beyond Structured Settlements” and has been a frequent speaker at national conferences sponsored by NSSTA, SSP, NAMSAP, ASNP, NASP and NAELA. Hindert served as keynote speaker at the first national structured settlement conference in Australia in 1994. He provided expert testimony to the United States House Ways and Means Committee in 1981 prior to enactment of the Periodic Payment Settlement Act of 1982.

Independent Life Insurance Company is not related to Independent Life & Accident, of Jacksonville, which was merged into American General Life Insurance Company in 1997.

American General was subsequently purchased by AIG in 2001 and it was part of AIG L& Retirement Division, which was renamed Corebridge Financial in a September 2022 spinoff.