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Workers Compensation Structured Settlements | Qualified Assignments On or AFTER August 5, 1997 Filings?

by John Darer® CLU ChFC MSSC CeFT RSP CLTC

Workers Compensation Qualified Assignments for Structured Settlements

Qualified assignment only became available for workers compensation cases filed AFTER August 5, 1997.

The Taxpayer Relief Act of 1997 amended the Internal Revenue Code, adding workers’ compensation payments under IRC § 104(a)(1) to the language of IRC §130, making them eligible for qualified assignment the same as physical injury or physical sickness tort claim payments under IRC § 104(a)(2), but applicable to claims under workmen’s compensation acts filed after the date of the enactment of the Taxpayer Relief Act (August 5, 1997).

On or prior to August 5, 1997, workers compensation parties could only make limited use of structured settlements where the future periodic payment liabilities were assigned (at the Safeco Life's SAFECO National facility) or through reinsurance, where the employer was insured.

 

 

What is A Structured Settlement Broker?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

What is a Broker?

A person who serves as a trusted agent or intermediary in commercial negotiations or transactions. Brokers are usually licensed professionals in fields where

A structured settlement broker should hold one or more active insurance licenses

specialized knowledge is required, such as finance, insurance, and real estate. Their 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).

Read more: http://www.businessdictionary.com/definition/broker.html

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 advice and placement of financial vehicles pursuant to professional licenses.

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/it  is 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 an insurance contract whose primary use 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.  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.

Can a structured settlement annuity be sold?

No, a structured settlement annuity cannot be sold.

 

Lump Sum Vs Structured Settlement

The Awarded a Settlement Vortex Sucks in News Organizations, Law Firms, Finance Textbooks, Settlement Planners

by Structured Settlement Watchdog

The awarded a structured settlement vortex is almost as viral as the "Plantiff" virus. But the former is a fundamental conceptual flaw while the latter is a

A jury doesn't negotiate a settlement or its terms. A jury does not award a settlement.

careless funny typo. 

What is astounding is the volume of people, that should be in the know, that are sucked into making the case for something that is not.

A Head Rattling Baker's Dozen of Awarded a Settlement "Boo Boos" 

1. Atlanta Journal Constitution has it really twisted with a title that says Georgia rape victim speaks about $1B Verdict and then in the same article says "a  rape victim was awarded a $1 billion settlement verdict"  May 23, 2018. A settlement verdict?
2. NBC News 26  " Florida Man Awarded a Settlement After Police Mistake Doughnut Glaze for Meth  October 15, 2017
3. Forbes' Tony Nitti takes two steps forward and three steps back with "In general, if you sue somebody and either win the suit or negotiate a settlement, your award is fully taxable under Section 61"  May 3, 2016
4. Chegg Study " You have been awarded a settlement of $12,000 per year for the next six years.. The fair rate is 9%. I offer to pay you $52000 for it now. Should you sell it?"   From A company that provides textbook solutions whose tag line is study smarter not harder. 
5. Los Angeles personal injury law firm describing how the settlement process works in a personal injury case  " When you are awarded a settlement in a personal injury case..."  April 23, 2016 still posted on firm's website
6. Settlement Planner "A Special Needs Trust may allow a disabled individual who has been awarded a settlement"  January 24, 2017
7. Same Settlement Planner " For example, if you are awarded a settlement of $350,000, but place it in a structured settlement annuity..." January 26, 2017
8. DRB Capital LLC factoring Company " When the claimant is found to have proved their case, they are typically awarded a settlement in cash terms" 
9. DRB Capital LLC has itself really twisted up here "If you’ve won a structured settlement in a lawsuit against an insurance company, then there are a lot of things that the courts will allow you to do with that money... But in many cases, the money you’re getting from the judgment is more than the amount you need to pay those bills, which means you can use it for other things by getting structured settlement funding"  [ Jim, Jason kindly get with the program please. It's on the Pig Crack page]
10. Elder law Firm New York "When an individual is awarded a settlement in a medical malpractice or personal injury suit, it is typically for more than just the medical expenses"  May 11, 2018
11. Tracy CA personal injury law firm " If you have been awarded a settlement after a personal injury cases (sic), you may wonder if you are facing a large tax bill" . The firm published the June 2017 blog in answer to the question are Jury Awards and Settlements Taxable?  Question counselors:  Do juries award settlements or do they approve settlements?
12. Seneca One factoring company in its  website "knowledge base" says " When a court decides that a death of a family member was due to a negligent or wrongful act of another individual, the beneficiaries can be awarded a structured settlement on the deceased’s behalf". 
13. Robin Roberts of Brightpath Financial Corp., misstates as fact "Fact 2: Structured Settlements offer value with restrictions. You have won payments for damages and have been awarded a structured settlement".  No you haven't.   [ Note: The Baker's Dozen of Settlement Boo Boos were all retrieved and compiled August 18-19, 2018]

Due to the very low bar the structured settlement factoring industry sets itself, such lack of fluency on the fundamentals is unfortunately to be expected (but not tolerated). But, how can a law firm not articulate the difference between a settlement and an award? How can a settlement planner not articulate the difference between a settlement and an award?  

The Eley Law Firm of Denver Colorado does an outstanding job of explaining the difference between a settlement and a workers compensation award.  They say:

 "A settlement is an agreement reached among the parties to a workers' compensation claim. This includes you, your employer and the workers' compensation insurer (unless your employer is self-insured). This is a type of contract, and it may bar you from seeking further compensation for your injury.

An award, on the other hand, is granted to you by the workers' compensation court. This may include medical benefits or other types of workers' compensation awards based on the specifics of your injury. For example, a judge can order — or an insurance company can admit for — temporary and permanent disability benefits. This isn't a settlement. You don't have to sign away any rights to get these benefits. If you need help determining whether you received an award or a settlement, we can help. We can review your situation and help you understand your legal options. We can also advise you before you accept an award or settlement"

 

Why care? Why let misinformation foster financial illiteracy? You're better than that.

David Klasing | "Disadvantages to a Structured Settlement Agreement"

by John Darer CLU ChFC MSSC CeFT RSP CLTC

An Irvine California tax attorney made an attempt to answer the above question 4 years ago.  There are a number of errors in the still live posting on the Orange county law/ accounting firm's website and still comes up in search results. I offer some commentary on that post in a effort to correct those errors.

1. Klasing places much emphasis is placed on the fact that the plaintiff cannot own the (structured) annuity. While true, the reality is that no structured settlement annuity issuer would even issue a structured settlement annuity with the annuitant listed as annuity owner. Even if paperwork were submitted with the annuitant as owner it would be rejected and no policy would be issued. This is nothing new. That's the way it has been for over 30 years. 
2. Klasing alleges, in part incorrectly, that the plaintiff typically cannot alter the amount of annuity payments (he, she, or it-in the case of a trust, receives), when there has been a process in place in California to do just that, since October 11, 2009.  Sale or transfer of structured settlement payment rights in exchange for a lump sum of cash is permitted provided the structured settlement transfer complies with state law.  Provided the law is complied with the annuitant effectively reduces the payments he, she or it receives.
3. Klasing errs in stating the plaintiff typically has no rights to the annuity greater than that of an unsecured general creditor when, since 1988, the footnote to IRC 130(c) reads "The determination for purposes of this chapter of when the recipient is treated as having received any payment with respect to which there has been a qualified assignment shall be made without regard to any provision of such assignment which grants the recipient rights as a creditor greater than those of a general creditor".  
   

Structured settlements provide a customized stable source of income that is income tax free for damages on account of personal physical injury, physical sickness, wrongful death [subject to IRC 104(a)(2)] , workers compensation [subject to IRC 104(a)(1)] and wrongful conviction/imprisonment [ subject to IRC 139F]. I like to use the metaphor of a "job you can never be fired from". The stable income can be helpful to rebuild financial lives, replace income from a former job, or the income contribution of a deceased spouse. It can help a college graduate get started in life without having to share a place with 3 people or work 3 jobs by necessity and have the stability to afford to take a lower paying internship or training program with good potential.

 

Settlement Planners and Structured Settlement Annuities | Agent, Broker or Planner?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Structured Settlement annuities are only placed by or in conjunction with licensed agents, brokers and consultants who hold active life insurance licenses (annuities, which are issued by life insurance companies, are grouped into this category for regulatory purposes) and are authorized by the insurers that issue the structured settlement annuities.

Note that even if someone markets themselves to you as a settlement planner, they are acting in the capacity as agent or broker when placing, or co-broking a structured settlement annuity.  In New York State, individuals or companies holding life broker licenses may also act as structured settlement consultants, but may not be appointed by the annuity issuer. Such brokers and consultants are generally paid a one-time commission or share of the commission, by the annuity issuer(s), or co-broker, for placing the structured settlement annuity or other funding asset.  Generally, state insurance law prohibits rebating of commissions.

What About all this noise about fiduciaries?

Simply being a fiduciary does not mean you can place structured settlement annuities.  Fiduciary is an ideological standard for many settlement planners. But the indelible fact remains that in order to place insurance products and receive a commission or fee, the same settlement planners must hold an active license and be authorized by the issuing life insurance company. Alternatively, at least in New York state, you can hold a life broker's license and not need an insurer appointment, if you place through an appointed agent.

Different business models abound, but in the end, it's the S.O.S. when it comes to placement of the structured settlement annuities!

 

Different business models, but same ole ... when it comes to placing structured settlement annuities or any form of insurance. When you place annuities you are acting as an agent, broker or in some cases a consultant

 

 

What Happens to Medicare Set Aside Account (MSA) When You Die?

by John Darer® CLU ChFC MSSC CeFT® RSP CLTC

If you die with a balance in your Medicare Set Aside (MSA), here's what may happen:

• If death occurs before the Workers Compensation Medicare Set Aside (WCMSA), Liability Medicare Set Aside (LMSA) or No Fault Medicare Set Aside
  

  What do you leave behind in a Medicare Set Aside account after you take "the final curtain"
  
  (NFMSA) is fully exhausted, the Estate Administator, Executor, or if the MSA is professional managed, the MSA Adminstartor should notify the  BCRC  (see BCRC below)
  
• Medical Service provided before the death, and related to the injury that led to the creation of the MSA are outstanding claims that must be paid for by the Estate of the person who has died with the open MSA.
• If there is any money left in the MSA account after all related and outstanding bills are paid, the funds are distributed according to the last will and testament of the person who has died. If the person has died without a will, any balance is distributed according to your state's intestacy laws.
• If the MSA is a Structured MSA and the annuity that funds the MSA has a certain period, or a cash or installment refund, payment will be paid to the named beneficiary or beneficiaries.  Note that some annuity funded MSAs are temporary life or straight life annuities that have no survivor benefits.

 What is the BCRC?

The Benefits Coordination & Recovery Center (BCRC) is responsible for ensuring that Medicare gets repaid by the beneficiary for any conditional payments it makes related to a liability, no-fault, or workers’ compensation case. A conditional payment is a payment Medicare makes for services another payer may be responsible for. The payment is "conditional" because it must be repaid to Medicare when a beneficiary receives a settlement, judgment, award, or other payment. When the BCRC learns of a case, they will gather information about any related conditional payments Medicare made and request repayment.

 

 

What is a Funding Agreement?

by John Darer® CLU ChFC MSSC CeFT® RSP CLTC

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 London Interbank Offered Rate (LIBOR). 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.

For more information about funding agreements and solutions offered by 4structures.com LLC please click here

NYC Structured Settlements 2019 | Structured Settlement Annuities in NY State

by John Darer CLU ChFC CeFT MSSC RSP CLTC

 

Which New York life insurance companies issue structured settlement annuities to fund New York structured settlements in Bronx, Brooklyn (Kings), Queens, Staten Island (Richmond) and New York (Manhattan), Nassau, Suffolk, Westchester, Orange, Putnam and Rockland Counties in 2019?

 

These insurance companies are the primary issuers of structured settlement annuities for the New York City area to fund NY personal injury, NY medical malpractice, NY wrongful death, auto accident, NY workers compensation settlements and to fund structured medicare set asides in 2019.

1. First Berkshire Hathway Life Insurance Company  Home Office: Flushing, NY
2. Metropolitan Life Insurance Company   Home Office: New York, NY
3. Metropolitan Tower Life Insurance Company Home Office: Wilmington, DE
4. New York Life Insurance Company Home Office: New York, NY
5. Pacific Life and Annuity Company   Home Office: Newport Beach, CA
6. The Prudential Insurance Company of America  Home Office: Newark, NJ
7. United States Life Insurance Company in The City of New York Home Office: New York, NY
8. USAA Life Insurance Company  Home Office: San Antonio TX (where parties consent to using non admitted carrier)

Cases in surrounding counties such as Fairfield County, CT and Bergen County , NJ would substitute, Berkshire Hathaway Life Insurance Company of Nebraska, Pacific Life Insurance Company and American General Life Insurance Company for numbers 1, 6 and 8 respectively. Please note that a limited number of insurance companies underwrite structured settlements compared to other types of annuities.

For New York cases that go to a structured judgment, pursuant to CPLR Article 50A or Article 50B, the following of the above structured settlement annuity issuers will write annuities to fund 50A or 50B structured judgments:

 

1. Metropolitan Life Insurance Company
2. Pacific LIfe and Annuity Company
3. United States Life Insurance Company in The City of New York

The onerous acceleration provision for late payments in Articles 50A and 50B is the primary reason for why only three carriers write structured judgment annuities in New York.

Periodic Payment Reinsurance is available through National IIndemnity Company (Berkshire Hathaway)

Structured settlement annuities are only offered through appointed structured settlement managing general agencies by their insurance licensed employees, or through affiliated insurance licensed independent agents and brokers.

Current as of December 2018

 

Note that structured settlement can also be funded with United States Treasury Obligations

What You Need To Know About Structured Settlement Quotes in New York

Structured Settlement quote form online. Click left or call 888-325-8640 toll-free for New York structured settlement quotes, employment structured settlement quotes, divorce structured settlement quotes, periodic payment reinsurance structured sales quotes for business installment sales and real estate installment

New York Structured Settlements

 

by John Darer CLU ChFC CeFT MSSC RSP CLTC

 

Which New York life insurance companies issue structured settlement annuities to fund New York structured settlements in Bronx, Brooklyn (Kings), Queens, Staten Island (Richmond) and New York (Manhattan), Nassau, Suffolk, Westchester, Orange, Putnam and Rockland Counties in 2019?

 

These insurance companies are the primary issuers of structured settlement annuities for the New York City area to fund NY personal injury, NY medical malpractice, NY wrongful death, auto accident, NY workers compensation settlements and to fund structured medicare set asides in 2019.

1. First Berkshire Hathway Life Insurance Company  Home Office: Flushing, NY
2. Metropolitan Life Insurance Company   Home Office: New York, NY
3. Metropolitan Tower Life Insurance Company Home Office: Wilmington, DE
4. New York Life Insurance Company Home Office: New York, NY
5. Pacific Life and Annuity Company   Home Office: Newport Beach, CA
6. The Prudential Insurance Company of America  Home Office: Newark, NJ
7. United States Life Insurance Company in The City of New York Home Office: New York, NY
8. USAA Life Insurance Company  Home Office: San Antonio TX (where parties consent to using non admitted carrier)

Cases in surrounding counties such as Fairfield County, CT and Bergen County , NJ would substitute, Berkshire Hathaway Life Insurance Company of Nebraska, Pacific Life Insurance Company and American General Life Insurance Company for numbers 1, 6 and 8 respectively. Please note that a limited number of insurance companies underwrite structured settlements compared to other types of annuities.

For New York cases that go to a structured judgment, pursuant to CPLR Article 50A or Article 50B, the following of the above structured settlement annuity issuers will write annuities to fund 50A or 50B structured judgments:

 

1. Metropolitan Life Insurance Company
2. Pacific LIfe and Annuity Company
3. United States Life Insurance Company in The City of New York

The onerous acceleration provision for late payments in Articles 50A and 50B is the primary reason for why only three carriers write structured judgment annuities in New York.

Periodic Payment Reinsurance is available through National IIndemnity Company (Berkshire Hathaway)

Structured settlement annuities are only offered through appointed structured settlement managing general agencies by their insurance licensed employees, or through affiliated insurance licensed independent agents and brokers.

Current as of December 2018

 

Note that structured settlement can also be funded with United States Treasury Obligations

What You Need To Know About Structured Settlement Quotes in New York

Structured Settlement quote form online. Click left or call 888-325-8640 toll-free for New York structured settlement quotes, employment structured settlement quotes, divorce structured settlement quotes, periodic payment reinsurance structured sales quotes for business installment sales and real estate installment

New York Structured Settlements

 

by John Darer CLU ChFC CeFT MSSC RSP CLTC

 

Which New York life insurance companies issue structured settlement annuities to fund New York structured settlements in Bronx, Brooklyn (Kings), Queens, Staten Island (Richmond) and New York (Manhattan), Nassau, Suffolk, Westchester, Orange, Putnam and Rockland Counties in 2019?

 

These insurance companies are the primary issuers of structured settlement annuities for the New York City area to fund NY personal injury, NY medical malpractice, NY wrongful death, auto accident, NY workers compensation settlements and to fund structured medicare set asides in 2019.

1. First Berkshire Hathway Life Insurance Company  Home Office: Flushing, NY
2. Metropolitan Life Insurance Company   Home Office: New York, NY
3. Metropolitan Tower Life Insurance Company Home Office: Wilmington, DE
4. New York Life Insurance Company Home Office: New York, NY
5. Pacific Life and Annuity Company   Home Office: Newport Beach, CA
6. The Prudential Insurance Company of America  Home Office: Newark, NJ
7. United States Life Insurance Company in The City of New York Home Office: New York, NY
8. USAA Life Insurance Company  Home Office: San Antonio TX (where parties consent to using non admitted carrier)

Cases in surrounding counties such as Fairfield County, CT and Bergen County , NJ would substitute, Berkshire Hathaway Life Insurance Company of Nebraska, Pacific Life Insurance Company and American General Life Insurance Company for numbers 1, 6 and 8 respectively. Please note that a limited number of insurance companies underwrite structured settlements compared to other types of annuities.

For New York cases that go to a structured judgment, pursuant to CPLR Article 50A or Article 50B, the following of the above structured settlement annuity issuers will write annuities to fund 50A or 50B structured judgments:

 

1. Metropolitan Life Insurance Company
2. Pacific LIfe and Annuity Company
3. United States Life Insurance Company in The City of New York

by John Darer CLU ChFC CeFT MSSC RSP CLTC

 

Which New York life insurance companies issue structured settlement annuities to fund New York structured settlements in Bronx, Brooklyn (Kings), Queens, Staten Island (Richmond) and New York (Manhattan), Nassau, Suffolk, Westchester, Orange, Putnam and Rockland Counties in 2019?

 

These insurance companies are the primary issuers of structured settlement annuities for the New York City area to fund NY personal injury, NY medical malpractice, NY wrongful death, auto accident, NY workers compensation settlements and to fund structured medicare set asides in 2019.

1. First Berkshire Hathway Life Insurance Company  Home Office: Flushing, NY
2. Metropolitan Life Insurance Company   Home Office: New York, NY
3. Metropolitan Tower Life Insurance Company Home Office: Wilmington, DE
4. New York Life Insurance Company Home Office: New York, NY
5. Pacific Life and Annuity Company   Home Office: Newport Beach, CA
6. The Prudential Insurance Company of America  Home Office: Newark, NJ
7. United States Life Insurance Company in The City of New York Home Office: New York, NY
8. USAA Life Insurance Company  Home Office: San Antonio TX (where parties consent to using non admitted carrier)

Cases in surrounding counties such as Fairfield County, CT and Bergen County , NJ would substitute, Berkshire Hathaway Life Insurance Company of Nebraska, Pacific Life Insurance Company and American General Life Insurance Company for numbers 1, 6 and 8 respectively. Please note that a limited number of insurance companies underwrite structured settlements compared to other types of annuities.

For New York cases that go to a structured judgment, pursuant to CPLR Article 50A or Article 50B, the following of the above structured settlement annuity issuers will write annuities to fund 50A or 50B structured judgments:

 

1. Metropolitan Life Insurance Company
2. Pacific LIfe and Annuity Company
3. United States Life Insurance Company in The City of New York

The onerous acceleration provision for late payments in Articles 50A and 50B is the primary reason for why only three carriers write structured judgment annuities in New York.

Periodic Payment Reinsurance is available through National IIndemnity Company (Berkshire Hathaway)

Structured settlement annuities are only offered through appointed structured settlement managing general agencies by their insurance licensed employees, or through affiliated insurance licensed independent agents and brokers.

Current as of December 2018

 

Note that structured settlement can also be funded with United States Treasury Obligations

What You Need To Know About Structured Settlement Quotes in New York

Structured Settlement quote form online. Click left or call 888-325-8640 toll-free for New York structured settlement quotes, employment structured settlement quotes, divorce structured settlement quotes, periodic payment reinsurance structured sales quotes for business installment sales and real estate installment

New York Structured Settlements

 

by John Darer CLU ChFC CeFT MSSC RSP CLTC

 

Which New York life insurance companies issue structured settlement annuities to fund New York structured settlements in Bronx, Brooklyn (Kings), Queens, Staten Island (Richmond) and New York (Manhattan), Nassau, Suffolk, Westchester, Orange, Putnam and Rockland Counties in 2019?

 

These insurance companies are the primary issuers of structured settlement annuities for the New York City area to fund NY personal injury, NY medical malpractice, NY wrongful death, auto accident, NY workers compensation settlements and to fund structured medicare set asides in 2019.

1. First Berkshire Hathway Life Insurance Company  Home Office: Flushing, NY
2. Metropolitan Life Insurance Company   Home Office: New York, NY
3. Metropolitan Tower Life Insurance Company Home Office: Wilmington, DE
4. New York Life Insurance Company Home Office: New York, NY
5. Pacific Life and Annuity Company   Home Office: Newport Beach, CA
6. The Prudential Insurance Company of America  Home Office: Newark, NJ
7. United States Life Insurance Company in The City of New York Home Office: New York, NY
8. USAA Life Insurance Company  Home Office: San Antonio TX (where parties consent to using non admitted carrier)

Cases in surrounding counties such as Fairfield County, CT and Bergen County , NJ would substitute, Berkshire Hathaway Life Insurance Company of Nebraska, Pacific Life Insurance Company and American General Life Insurance Company for numbers 1, 6 and 8 respectively. Please note that a limited number of insurance companies underwrite structured settlements compared to other types of annuities.

For New York cases that go to a structured judgment, pursuant to CPLR Article 50A or Article 50B, the following of the above structured settlement annuity issuers will write annuities to fund 50A or 50B structured judgments:

 

1. Metropolitan Life Insurance Company
2. Pacific LIfe and Annuity Company
3. United States Life Insurance Company in The City of New York

What Factors Affect Structured Settlement Annuity Rates? Structured Settlement Users Guide

by John Darer® CLU ChFC MSSC RSP CLTC

Here are primary factors that affect the structured settlement annuity rates.  

Putting together the structured settlement jigsaw puzzle for you

1. DATE OF BIRTH (If Lifetime Benefits are being considered)

The cost per $1,000 of payments for life is less expensive at the older ages

2. RATED AGE

A review of medical records by a medical underwriter for a life insurance company that (1)  issues structured settlement annuities and (2)  issues rated ages assigns an older age to you for pricing purposes and this lowers the cost per $1,000 or boosts the yield per $1,000 cost on lifetime benefits for that annuity issuer.  The rated age assigned may vary from company to company. A higher rated age does not automatically translate into higher benefits. A rated age does not affect the cost of benefits that are paid for a fixed period certain.

3. LENGTH OF CERTAIN PERIOD

Life contingent payments are only paid if you are living. Certain payments will be paid whether or not you are living when a payment is due. So if you choose a 30 year certain and life, payments will be made for the rest of your life or 30 years, whichever is longer. You can choose how long or short you want. A longer certain period means you receive fewer payments while you are alive, but means you may leave more to your beneficiary if you die before the certain term is over.  If you are young the adjustment is fairly modest. At older ages the spread can be more significant. In some cases a multiple product arbitrage can make a difference  (contact me for details).

4. THE USE OF ANNUAL INCREASES

Increases have a meaningful effect on the amount of payments you initially receive but if you are willing to wait, it can pay out more over time.  That is balanced against your needs and wishes now since you must be willing to accept a lower starting amount when compared to level payments.. It's important to do a cross over comparison so that you can see how long it will take for payments on the increasing option to (1) exceed the level payments and (2) how long it will take for the aggregate payments from the increasing plan to exceed the aggregate payments on the level plan.

5. DAILY RATES

Many companies offer daily rate pricing which may or may not be better than their general pricing.  The threshold for offering daily rates varies by company.  One company only offers daily rates.  Note that daily rates are typically good until the end of the business day quoted however, some carriers will give a nominal additional amount more time, for example to the next day or in one case 2 days.

6. INSURANCE COMPANY PREMIUM LIMITATIONS

Some companies have low premium limitations before they require daily rate pricing which for them may be worse. 

7. DIVERSIFICATION

Diversification is a good idea, but it may impact the price/yield due to variations in price between insurance companies.   We have longstanding relationships with the leading insurance companies that underwrite structured settlements.

     8. PUTTING TOGETHER “THE JIGSAW PUZZLE”

Sometimes we can get a better price by combining two or more companies by their strengths. One  life insurance company issuing structured settlement annuities may be better for earlier payments and another for later payments. One may handily beat the competition for premium up to $1,000,000.

Sometimes there are unique considerations  (1) some companies will not participate unless you have a US tax ID number (2) some companies will not mail payments to another country (will require US bank deposit account) (3) taxable damages case have options in a more limited universe.

A SIMPLE WAY TO DEAL WITH THE STRUCTURED SETTLEMENT PRICING VARIABLES

1. Consider if stable income important to you?   If yes...
   
2. Consult a structured settlement expert. 
   
3. Review current sources and uses of funds, determine where the gaps are.
4. How much stable income do you need each month?  Or quarter or year?
   
5. Do you want to provide for beneficiaries?
6. Review and select a plan design
7. Explore diversification options with structured settlement expert.
   
8. Your structured settlement expert will daily rate shop.

Note that a structured settlement is a core settlement planning tool or option. There may be other important considerations. Always work with someone with proper credentials and experience.

 Other related information that may be helpful

Types of Structured Settlement Payments