Structured Settlements

Overview

Since entering the marketplace, we have provided financial security through structured settlement annuities for the claimants of a variety of lawsuits. Clients look to us for our expertise and ability to create customized, tailored solutions.

Our clients know they can count on us for financial stability and appreciate the security of a trusted company. Our financial strength ratings are among the highest in the industry.¹

What is a Structured Settlement?

A structured settlement is an agreement between a claimant and a defendant under which the claimant receives a settlement award in the form of a stream of periodic payments. A structured settlement may be agreed to privately, in a pre-trial settlement, or may be required by a court order, which often happens with judgments involving minors.

In 1982, Congress passed legislation affirming that claimants in personal injury,
wrongful death and worker’s compensation lawsuits could receive their settlement awards as streams of tax-free income payments through a structured settlement annuity. Prior to the legislation, settlements were awarded as single lump sums, and claimants were often burdened with the task of managing the money themselves. Structured settlements provide a solid foundation for future financial security. It is important to carefully evaluate the choices available and decide which payment option is most appropriate.

Benefits of a Structured Settlement

Tax-Free Income

A structured settlement is a one-time opportunity to settle a personal physical injury claim, including wrongful death, with tax-free benefit payments.² It is tax-free based on Section 104(a)(2) of the Internal Revenue Code. By contrast, the investment earnings on a lump sum payment are usually fully taxable.³

Predictable Income

Guaranteed structured settlement payments can provide claimants with predictable income for the rest of their lives. These payments can be customized to fit their financial needs.⁴

Guaranteed Payments for Life⁴

The availability of lifetime payments can be of critical importance to claimants, since lifelong income can provide them with increased financial security. Now that people are living longer, many people are concerned about outliving their savings.

Payments to the Beneficiary

Guaranteed structured settlement payments can be received by the named beneficiary on a tax-free basis.^4,5 If a claimant accepts a settlement in a lump sum, there is no guarantee that there will be money available for a named beneficiary after the claimant’s death. 

Compare the Benefits

Example

Consider the difference between a lump sum settlement of $500,000 versus purchasing a structured settlement annuity. The settlement, when used to purchase a 30-year certain and life structured settlement annuity with $500,000 for a 21-year-old male, will provide $1,974 per month and a total guaranteed payout of $710,705. If the claimant lives to life expectancy, the total payout would be $1,478,661.

Lump Sum Settlement of $500,000 Versus Purchasing a Structured Settlement Annuity