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Structured Settlement Quotes | Guide to Structured Settlement Quotes

by John Darer® CLU ChFC MSSC CeFT RSP CLTC

How do you obtain a structured settlement quote? 

First, make sure that you are speaking to a true structured settlement broker, expert or consultant and not a factoring company or cash flow company representative masquerading under any of these terms.

Most state insurance departments in the United States have consumer protection regulations which require actuaries at insurance companies to certify that each liability has an asset to match it on an annual basis. Therefore, the insurance companies issuing structured settlement annuities must be careful in rate setting to assure that they have a balance of assets to meet their obligations. Should it take on too much premium and the corresponding liability, without assets to match, an insurance company could find itself in hot water with the regulators.

What are the types of structured settlement quotes?

On a very basic level there are several types of quotes: Book Rates, Daily Rates and either of the two with a Rated Age or special impaired risk pricing .

Book rates are the published rates of the structured settlement annuity issuer. The "book" refers to the fact that in the pre-computer era, rates literally came from a rate book or rate sheet. Today most companies make such rates are available for download online to its appointed agents/brokers so that your structured settlement broker, expert, consultant or settlement planner should have in his/her office or installed on his/her note book computer. Book rates change periodically. Generally book rates are good for a certain number of days

Daily rates, as you might assume, are generally good "for the day of quote only", a " blue plate special". Given that bond markets fluctuate daily there may be bonds out there on a particular day that will permit the annuity issuer to issue a more aggressive rate. In part because of the asset/liability matching requirement most annuity issuers require daily rate pricing on very large cases (definition of "very large" varies by company).  Note that some structured settlement annuity issuers will hold daily rate pricing for 24 hours.

Rated age pricing applies to book rates or daily rates. A rated age affects the cost of any life contingent structured settlement annuity benefit. Rated ages are opinions based on medical information concerning the annuitant that causes the underwriter to believe that the plaintiff or annuitant has a shorter than normal life expectancy. Based on this opinion the annuity issuer is wiling to issue the annuity at a lower cost/higher yield an absorb the mortality risk. A rated age can either reduce of the cost of providing a known life contingent benefit or it can boost the yield per claim dollar if buying a life contingent benefit and the contribution is known. Rated ages vary by annuity issuer and the effect of the rated age on the pricing of the annuity will vary by company and even by the type of benefit desired. If you are seeking a benefit that is for a certain period of years or is a guaranteed lump sum  payment then the rated age has no effect on the cost of the structured settlement.

Different structured settlement annuity issuers specialize in different types of cash flows. Some may be better short term. Some may be better long term. Some may specialize in lump sums. Others may be more competitive at older ages or with deferred start dates. It seems complex but a good structured settlement broker, expert, or consultant should be skilled at weaving the best plan/offer together for you or your client. Such plan/offer may involve one or more structured settlement annuity issuers.

Most structured settlement brokers today have the ability to send you structured settlement quotes via email for speed, ease of storage and re-transmission (to clients or other advisers) and reduce your paper clutter.

One thing to note is that a quote to "sell your structured settlement annuity payments rights" is NOT a "structured settlement quote". To clear up the confusion (created by factoring company Internet advertising) it is a "factoring quote".

Updated July 1, 2023

 

Do Structured Settlement Payments Get Inherited Through Your Will, or Do You Name a Beneficiary?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Once again, I'm scratching my head at the output of the settlement purchasing company that is currently believed to be the only member of the National

Name, Confirm, Repeat as Necessary

Association of Settlement Purchasers with a related entity that has agency relationships with structured settlement annuity issuers and brokers structured settlement annuities in the primary market. 

In the process of soliciting people to sell their structured settlement payments the New York company states in a blog:

"A loved one left you their future structured settlement payments in their will, and you’re wondering what you can do with it. Maybe you have a business opportunity, or you are interested in purchasing a house. You might be facing an emergency and looking at your options to cover that sudden expense. So, can you sell this asset? The short answer is yes. If you inherited a structured settlement, that means you now have the rights to it, and to the future payments. And in situations where you have a financial need, you most likely qualify to sell some or all of the future payments from the inheritance for a lump sum in cash" Source: CrowFly website

While it's certainly possible that someone could name a beneficiary of structured settlement payments in their will, it is certainly not the norm and probably not advantageous to do so:

1. Naming a beneficiary with the structured settlement annuity issuer is easy and simple. You fill out a beneficiary designation form and you file it with the insurer, checking to confirm that your wishes have been recorded. Your signature may need to be notarized.
2. You can name and change primary and contingent beneficiaries and their respective shares/percentages at any time, as long as such changes are in writing and in the proper format accepted by the insurance company that issues the structured settlement annuity.
3. Naming a beneficiary with the structured settlement annuity issuer means that the proceeds will begin to flow directly to your beneficiaries without delays and costs associated with probating an estate. It's the matter of completing a claim form and providing a copy of the death certificate. 
4. Death proceeds that pass through the probate estate are subject to executor/executrix fees (if there is a will), administrator/administratrix fees (if there is no will)
5. Death proceeds that pass through the probate are subject to claims of creditors of the Estate. 

Where might you find future structured settlement payments going into an Estate?

• If you fail to name a beneficiary for your structured settlement, or the beneficiary you name is not living at the time of your death, and you have not named a contingent beneficiary, payments will default to your Estate.
• If the payments are going to a trust, such as Special Needs Trust or Supplemental Needs Trust, your structured settlement has a full commutation provision at death and there is an abundance of cash that exceeds the Medicaid payoff, payment will be distributed subject to terms of the trust. 
• A number of structured settlement annuity issuers, including Berkshire Hathaway Life Insurnace Company of Nebraska, First Berkshire Hathaway Life Insurance Company and Independent Life Insurance Company will allow a beneficiary designation that allows a partial commutation based on a notice of shortfall in the trust assets to satisfy amounts owed to Medicaid and/or Estate taxes. The balance would go to named beneficiary or beneficiaries, or the Estate (if no beneficiary has been named, or if a beneficiary has named, but no contingent beneficiary has been named at the time of the annuitant's death).
• If you are selling (or have sold) part of a lump sum structured settlement payment to a settlement purchaser such as CrowFly, and the annuity issuer will not split annuity payments, payments will be subject to a payment servicing arrangement. It's really important that anyone entering into a structured settlement factoring transaction where payments are being serviced and where the seller is only doing a partial sale, to name and confirm in writing both a primary and contingent beneficiary.

4structures.com LLC has a number of resources about the wisdom of naming beneficiaries on structured settlements

Why It's Important to Name a Beneficiary on a Structured Settlement Annuity

Structured Settlement Beneficiary Designations| The Beneficiary Mantra

 

"My Structured Settlement Payments Are Late' What Happened?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Structured settlement payments should not be late, "for their very important date", with you.

 

If payments are sent by mail, the annuity issuer will usually mail the payments to your address of record 5-10 days prior to the due date. 

• It is important and a requirement of most settlement agreements that the structured settlement payee is responsible for notifying the annuity issuer or qualified assignment company of any change of address.
• If your structured settlement was set up when you were a child and you've moved, be sure to confirm that the annuity issuer or assignee has your current mailing address.

Telephone numbers of current and former structured settlement annuity issuers

• If payments are made by direct deposit, which is the preferred and most reliable method of receiving your structured settlement payments, your payments are made directly into your bank account on record on the date payments are due. The funds should be available on the date of deposit, depending on your bank's polices.  
• If you have previously sold some of your structured settlement payments and your payments are being serviced (subject to a servicing agreement) then you may need to contact the servicing company to make such changes. 
• If you have multiple structured settlement annuities review the paperwork associated with your structured settlement transfer carefully.  It is possible that you sold payments from one annuity and not the other so more than one of the above options may apply.

Structured Settlement History Lesson | When Was The Great Depression Again?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Something for your history buffs. Seen on the website of another settlement planning firm today:

"Most of the companies that issue structured settlement annuities have withstood the most dramatic financial events in United States history, including The Great Depression and the 2008 financial crisis. In fact, since 2008, no life insurance companies who issue structured settlement annuities have become insolvent".

The statement while technically true, is somewhat misleading because in 2013 Executive Life Insurance Company of New York was liquidated leaving a number of annuitants with less than the full amount of structured settlement payments promised.  The company was first taken over by the New York State Insurance Department in the early 1990s. Moreover, the implementation of Risk Based Capital standards in response to the Executive Life and other insolvencies in the 1980s and early 1990s, was an important regulatory tool designed to maintain solvency of insurance companies.

There are then listed a number of life insurance companies and their purported dates of establishment 

                                                    Purported                        Actual                

American General             N/A                                1960

Berkshire Hathaway          1919                               (see next three)

BHLN                                 N/A                                 1993

Columbia Insurance Co.      N/A                                 1977

National Indemnity Co.        N/A                                1940

Independent Life               N/A                                  2018

Metropolitan Life               1839                                1868*

Metropolitan Tower             N/A                                1982 

New York Life                    1870                                 1845*     

Pacific Life Insurance Co    1845                                 1868*

Pacific Life and Annuity       N/A                                  1982

Prudential                           N/A                                 1875*

United of Omaha                1868                                 1926* 

United States Life in CoNY  N/A                                  1850*

USAA Life                           N/A                                  1963                      

The Great Depression  August 1929-March 1933

Notes

• Companies established prior to, and in business during, The Great Depression 6
• Companies underwriting structured settlements today 13
• Percentage of companies currently writing structures that were established prior to, and in business during The Great Depression 46.15%

N/A No purported date of establishment on the subject website and/or the insurer was omitted

Metropolitan Tower Life is the primary underwriting company for MetLife Structured Settlements today. It was established in 1982.

I think the truth is obvious. Res Ipsa Loquitur. More About the History of Structured Settlements

 

 

Can You Inherit a Structured Settlement Annuity?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Thinking about what happens to structured settlement payments after the death of the Measuring Life, which of these four statements is correct when used to fill in the blank?

You can______________

1. inherit a structured settlement annuity
2. inherit the right to receive future periodic payments
3. inherit structured settlement payments
4. inherit a structured settlement

A.    1

B     2

C     3

D   2, 3 and 4

E.  all of the above

The correct answer is D, because nobody can actually inherit a structured settlement annuity. 

A structured settlement is established by contract between settling parties to a claim or lawsuit. When a structured settlement is established part of the consideration for the release of the Defendant is an obligation to make future periodic payments  (structured settlement payments). Generally this future periodic payment obligation is assigned by way of what is known as a qualified assignment to a qualified assignment company

In general, a structured settlement annuity is a qualified funding asset (defined at IRC 130(d) and owned by a qualified assignment company.  Neither a Payee, nor a Contingent Payee, actually owns the annuity contract funding the periodic payment obligation to them.

 

Structured settlement payments can be inherited by beneficiaries

 

Image Source: Giphy

Maryland EXCLUDES Acquired Structured Settlement Payment Rights From Guaranty Fund Cover

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Bad news for investors in structured settlement payment rights in Maryland

You aren't going to get any protection from the Maryland Life and Health Guaranty Corporation in the

Bad news for investors in factored structured settlement payments

event the insurance company issuing the investor's checks goes insolvent and liquidates.  To be clear, the latest revision to Maryland law affects investors who buy other people's structured settlement payment rights.

EFFECTIVE DATE: July 1, 2020

SENATE BILL 186 / HOUSE BILL 141 (CHAPTER 74 / CHAPTER 73) - LIFE AND HEALTH INSURANCE GUARANTY CORPORATION ACT -- REVISIONS

• Revises the Life and Health Insurance Guaranty Corporation Act.
• Incorporates the 2017 changes to the NAIC’s Life & Health Guaranty Association Model Act (#520) whose purpose was to provide a mechanism to more fairly assess for receiverships involving long term care insurers.
• Includes health maintenance organizations (HMOs) as assessable ‘member insurers.‘
• Excludes coverage for a person who acquires rights to receive payments through a structured settlement factoring transaction.

Guaranty Fund Exclusion of Investors in Acquired Structured Settlement Payment Rights Is a Thing

The Maryland move is part of a trend to exclude such investors and rightly so, in my opinion. According to the National Association of Life and Health Guarnty Associations (NOLHGA) "State life and health insurance guaranty associations provide a safety net for their state’s policyholders, ensuring that they continue to receive coverage (up to the limits spelled out by state law) even if their insurer is declared insolvent. Working together through NOLHGA, the guaranty associations form a national safety net, protecting insurance consumers all across America in their time of need". 

Acquired structured settlement payment rights are often marketed to investors using terms such as SMA, SMIA, recycled structured settlements, used annuities and by the tertiary market scam label "secondary market annuities" (even though these instruments are most certainly not considered annuities, according to case law and the National Association of Insurance Commissioners).

Those marketing efforts have unfortunately have included a few corpulent "wolves in sheep's clothing" settlement planners who potentially endanger their personal injury victim and attorney clients with their intentional misrepresentation of such investments. Guaranty Fund coverage is limited as it is.

Clearly the purpose of the state guaranty laws is protect insurance consumers. Investors are not insurance consumers because what they are buying is not insurance.

Fiduciary Duty

Trustees of trusts for injury victims and fiduciary financial advisors also need to be vigilant of the new Maryland development and that it is reasonably foreseeable that the trend of exclusion of investors in acquired structured settlement payment rights will continue.

Postscript: As of July 2023, 80% of USA states had adopted the 2017 Revisions to the Life & Health Guaranty Association Model Act (#520), which contains the aformeentioned exclusion.

 

 

 

 

Colorado House Bill 1420 Effort to End PREMIUM TAX Exemption for Structured Settlements THWARTED

by John Darer CLU ChFC MSSC CeFT RSP CLTC

A Colorado Springs Gazette editorial reported June 11, 2020 that Colorado House Bill 1420 introduced June 8, 2020 "would eliminate tax exemptions for "deposit fund annuities, structured settlements and lottery payouts". The bill was passed out of committee Tuesday with the session ending this week. But what appeared as a bullet point is misleading because the bill only refers to premium taxes paid by insurance companies.

Section 11 repeals the statutes that provide an insurance premium tax rate reduction for insurance companies maintaining a home office or a regional home office in the state. Section 11 also clarifies that, for purposes of the insurance premium tax, an "annuity plan" or an "annuity consideration" does not include a deposit-type contract that does not incorporate mortality or morbidity risks, such as a guaranteed investment or interest certificate, a supplementary contract without life contingencies,an annuity certain, a premium fund or other deposit fund, a dividend accumulation, a coupon accumulation, a lottery payout, or a structured settlement.  Read the actual text of House Bill 1420

What is Premium Tax?

Premium tax is a tax that insurers often have to pay on the premiums that they receive from their policyholders. The tax varies from state to state.  Structured settlement annuities are not purchased by individuals. Structured settlement annuities are generally purchased by assignment companies.

Damages for personal injury have been tax exempt for more than 100 years on a federal level. The Revenue Act of 1918 is the origin of the exclusion for personal injury damages presently encapsulated in IRC Section 104(a)(2). When one boils down a properly constructed personal injury structured settlement transaction, each of the future periodic payments is considered payment of damages under IRC 104(a)(2).

Read more about the tax benefits of structured settlements

ColoradoHB1420  #coloradostructuredsettlements

Post Script  Good news for Coloradans and assignment companies domiciled in Colorado

A joint statement from a coalition of trade organizations, including; the American Council of Life Insurers, the National Structured Settlements Trade Association, the American Association of People with Disabilities, the National Association of Insurance and Financial Advisors and IRI was sent to the Colorado state legislature on June 12th urging them to reject a tax increase on injured people in Colorado and retirement savers that could impact 20-thousand Coloradans. As a result of these industry and as partner organizations along with considerable grassroots efforts in the state, the Colorado legislature dropped the bill and efforts to impose taxes on annuities

What is A Structured Settlement Broker? Structured Settlement Broker 2023

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 structured settlement broker should hold one or more active insurance licenses and carrier appointments

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).

Read more about What is a Broker? 

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 Settlmeent 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 August 19, 2023

 

My Structured Settlement Payment is Late. Why?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Structured settlements provide reliable stable income payments,  Structured settlement payments can be mailed to you or they can be made by direct deposit. 

When you receive structured settlement payments by check the insurance company will mail the payments in advance of the due date so payment arrive on time. When payments are made by direct deposit the payments are made on the due date, unless the due date is a holiday or weekend  (see below for details).

Reasons why a structured settlement payment may be late

It's Saturday and my payment was supposed to be direct deposited on the 15th

1. Does your payment due date fall on a weekend or holiday?

In the United States, account to account transaction are made using ACH (Automated Clearing House), which moves more than $41 trillion and 24 billion electronic financial transactions annually. ACH only operates on normal banking days, which don’t include weekends, national holidays or bank holidays. If your payment date falls on a weekend or holiday, don't worry, your payment will likely be made on the next business day.

2. Have you moved?

If you have moved, please note that your settlement agreement may provide that it is your responsibility to notify the structured settlement annuity issuer or assignment company of your new address.  Put "notify insurance company" on your " To Do" list if you are planning to move.  This is especially critical if you have infrequent payments.

Customer Service Phone Numbers for Current and Former Structured Settlement Annuity Issuers

3. Have you changed bank accounts?

Plan ahead and notify the structured annuity issuer one month in advance of the move. Don't close your old account until you have confirmation that the new direct deposit has been established.   

4. Has the annuity issuer merged or been sold?

The company that is acquiring the annuity issuer may have different systems or procedures in place. A classic example is that Aviva Life Insurance Company used to mail payments 10 days in advance of a due date. In many cases this would result in payments coming in very early. People came to rely on the early payments even though it might have been a week before payments were contractually due, according to the settlement agreement. Sometime after Aviva USA was acquired by Athene Holdings in 2013, the payment time frames were tightened and  annuitants thought their payments were late, due to their experience (of receiving them early), but they were actually on time.

If the annuity issuer has been sold then it is possible that a third party administrator is handling the run off. The above linked list of contact numbers should be very helpful.

5. Have you sold some of your structured settlement payments in the past?

If you have sold any part of any structured settlement payment to a buyer like Novation Funding in the past and your annuity issuer is one of those companies that does not split payments (e.g. American General Life Insurance Company, United States Life Insurance Company in the City of New York), then you are probably receiving the payments from a third party known as a payment servicer. Subject to a servicing agreement, the servicing company receives the entire annuity payment for that month and divides it up between you and the company that you sold to (or the individual or company that THEY assigned payments to). In all of that processing there is always the possibility for a delay.

#latepayment #missingpayment #annuitypayment

 

 

 

 

 

What Happens to An Annuity When You Die?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

What Happens to an Annuity When You Die?

If the annuity is a retirement annuity, the policy is in accumulation phase  (payouts have not begun at the time of death) AND the owner has named beneficiaries, the value of the annuity on the date of death is paid to the primary beneficiary. An advantage of naming a beneficiary is that the funds are available much faster to the beneficiary than they would be having to go through probate. Some companies give options for extending the deferral of interest. Required minimum distributions may be necessary where the decedent was over 70 1/2 at the time of death.

If the annuity is a payout annuity, such as a deferred income annuity (DIA) single premium income annuity (SPIA) or structured settlement annuity (SSA), AND the annuitant has named a beneficiary, only periodic payments that are certain are paid to beneficiaries, when they are due.

If the annuity is structured settlement annuity (SSA) with a commutation rider that has been in place since the annuity was established, AND the annuitant has named a beneficiary, remaining certain payment are commuted to a lump sum using the formula stated in the contract and paid to the designated beneficiary.  In some cases the designated beneficiary may be a trust.

Why Not Naming a Beneficiary to Your Annuity, or Leaving It To Your Estate is a Bad Idea.

If there is no named beneficiary, payments are made to the Estate of the deceased annuitant payee. The value of the annuity on the date of death to must go through the probate estate and will be hit with any fee or charge that is based on the assets of the Estate.

Do you need to name an annuity beneficiary in your will?

No, you do not need to name an annuity beneficiary in your will because all it will do is delay the payment of proceeds while the Estate of the decedent is probated. Naming a beneficiary with the annuity issuer results in much faster and less costly distributions following the death of the annuitant payee.

When this post was first published, Elaine Silverstrini, a writer for the unreliable website Annuity (dot)org, lead generation company for CBC Settlement Funding, clearly did not have a handle on this. She wrote:

"After the death of an annuity owner, annuities can be left to a beneficiary selected by the owner. This means an annuity held by a parent, spouse or another loved can be willed to a person named as a beneficiary".

Ah...no. Not a good idea for the reasons stated above.

Name a beneficiary using the form supplied by the annuty issuer, submit and confirm

You can also name a primary beneficiary and a contingent beneficiary in case the primary beneficiary is not living at the time of your death.  With a payout annuity, such as a structured settlement, the beneficiary can name their own beneficiary once they begin receiving payments. Submit any changes on the form provided by the annuity issuer and don't forget to confirm receipt and that changes are properly recorded. Usually a letter goes out to confirm, but you should take practive steps yourself anyway.

Last updated August 5, 2023

 

Structured Settlement | What is a Structured Settlement | Definition of Structured Settlement

by John Darer® CLU ChFC MSSC CeFT RSP CLTC

What is a Structured Settlement?

A structured settlement is a negotiated financial or insurance arrangement through which a claimant or plaintiff agrees to resolve a personal injury tort or wrongful death claim by receiving all or part of a settlement in the form of periodic payments on a agreed customized schedule, rather than as a lump sum.

A structured settlement is a negotiated agreement

Definition of Structured Settlement per IRC §5891(C)(1)

The term "structured settlement" means an arrangement—

(A) which is established by—

(i)

suit or agreement for the periodic payment of damages excludable from the gross income of the recipient under section 104(a)(2), or

(ii)

agreement for the periodic payment of compensation under any workers’ compensation law excludable from the gross income of the recipient under section 104(a)(1), and

(B) under which the periodic payments are—

(i)

of the character described in subparagraphs (A) and (B) of section 130(c)(2), and

(ii)

payable by a person who is a party to the suit or agreement or to the workers’ compensation claim or by a person who has assumed the liability for such periodic payments under a qualified assignment in accordance with section 130.

 

 

 Read What You Need to Know About Structured Settlements

 

 

Non Qualified Structured Settlements

Structured settlements can also be used for taxable damages, or for tax exempt damages that are not specifically included in IRC §130  (e.g wrongful imprisonment, wrongful conviction which are exempt under IRC §139F).

How Are Structured Settlements Funded?

Structured settlement payments are generally funded and backed by highly rated and regulated life insurance companies, a number of which have been in operation for more than 100 years.  Structured Settlements can also be funded with obligations of the United States Government (Treasury Funded Structured Settlements)

Structured settlements have received widespread bipartisan support from the U.S. Congress since the enactment of the Periodic Payment Settlement Act of 1982. 

Last updated August 5, 2023