by John Darer® CLU ChFC MSSC RSP CLTC
A rated age will be issued if the structured settlement annuity issuer believes the plaintiff has an impaired life expectancy. The rated age is simply the
age used to price the structured settlement annuity, or New York structured judgement annuity, as opposed to the actual age.
- From the plaintiff's perspective, rated age will serve to boost the yield per settlement dollar allocated to a structured settlement.
- From a defendant or insurer's perspective, a rated age will serve to reduce the cost of settlement offers for paying life contingent future damages.
How Does a Rated Age Help Reduce the Cost of A New York Structured Judgment?
A rated age could reduce the cost of a structured judgment in New York for a Defendant. Certain aspects of a structured judgment, pursuant to CPLR 50A or CPLR 50B are life contingent, future medical expenses and future pain & suffering. A rated age would most likely impact future medicals, which stretch many years into the future, Under New York law, future pain & suffering is compressed into 8 years for Article 50-A and 10 years for Article 50-B structured judgments, so it would need an exceptionally high rated age to have any impact.
High rated age structured settlements may hold an advantage over other vehicles and even a modest amount allocated from a large settlement, can effectively be used as an "investment backstop" to assure a certain level of future income, even if everything else is lost. Moreover payments from structured settlements are income tax-free pursuant to Sections 104(a)1 or Section 104(a)(2) and 130(c) of the Internal Revenue Code. A structured settlement offers contractual certainty as opposed to hypothetical investment possibility. A structured settlement blended with a settlement trust,such as a Settlement Preservation Trust or Special Needs Trust (Supplemental Needs Trust in New York state),in tandem, may offer a plaintiff a measure of liquidity, contractual guarantees, upside potential along with downside protection.