This article discusses the benefits and disadvantages of structured settlement annuities. - Structured settlement annuities are a financial product that provide a term income stream to those who have received legal settlements. Structured settlement companies purchase annuity contracts from insurance companies and use the payments to fund their liability for the payment of the legal settlements. Structured settlement annuities can also be used to purchase other qualified assets such as stocks, bonds, and mutual funds. The resources available for determining investment strategies for these annuities can vary, depending on the company providing them. For an injured claimant, structured settlement annuities may offer an alternative to receiving compensation in one lump sum. Receiving payments over time allows the claimant time resources to make wise spending decisions instead of giving away their ability to create wealth by taking a one-time lump sum payment.
Structured settlement annuity payments provide free benefit payments to individuals that have been awarded damages from a personal physical injury, including wrongful death, lawsuit. A structured settlement is a financial arrangement where a claimant agrees to accept a smaller award amount in exchange for periodic payments over time. They are considered investments with the Internal Revenue Code clarifying that if the structure is drafted correctly it should not be subject to income taxes. The claimant will have the opportunity to receive larger awarded sums of money but this comes with taking one payment instead of the more beneficial option of receiving smaller payments over time. The individual who decides on this payment schedule can be either an insurance company or the injured party through their attorney.
Structured annuity settlements are used to settle personal injury claims, including those from tort claims. In a structured annuity settlement, the payor gets a full deduction for any payments made to an injured victim as a result of a personal injury tort claim. The recipient of the payments agrees to receive periodic payments over time instead of receiving the full amount in one lump sum. These payments can include an interest payment component which is tax-free when the award is received. In addition, they can also be used to provide an incentive for the claimant by allowing them to receive part of their award at the same time as converting part into interest elements. The IRS code provisions allow these awards to be tax-free and also allows the payor gets a full deduction on their taxes.
Structured Annuity Settlement is a great option for those who have received a lump sum injury settlement. It is the process by which the Plaintiff invests the money they have received and places proceeds into an annuity which provides future payments to the plaintiff over time. This allows them to spend their settlement without robbing their future income, as traditional investments may do. The annuity not only provides long term financial security, but also gives the plaintiff control over how they spend their settlement money.
Structured annuity settlements allow an individual to receive a regular payment over time rather than a lump sum of cash. Settlement funding organizations provide annuities structured settlements, and offer life insurers the ability to facilitate purchase of former structured annuity issuers' payment rights, provided such transaction complies with the law. Allstate Life Insurance Company, Symetra, Berkshire Hathaway Life Insurance Company of Nebraska and other major insurance companies are partnered with CBC Settlement Funding to offer consumers their stream of payments or a lump sum cash option for their structured settlement.
Cited Sources
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https://en.wikipedia.org/wiki/Structured_settlement 2
https://www.metlife.com/retirement-and-income-solutions/structured-settlements/ 3
https://www.forbes.com/advisor/legal/personal-injury/what-is-a-structured-settlement/ 4
https://www.cashinyourannuity.com/structured-settlements/ 5
https://www.annuity.org/structured-settlements/ 6
https://www.jgwentworth.com/sell-structured-settlement 7

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