The Structured
Settlement is composed of a combination of an immediate lump sum payment amount
and a series of future periodic payments specifically designated to meet the
needs of an individual claimant.
It is logical to avoid an "all cash" settlement in cases where
damages are expressed in terms of immediate and lifetime needs. The use of
annuities in Structured Settlements becomes more compelling in cases where the
major part of these needs are somewhere in the future. (Traditionally, the
needs of the future have been handled by annuities in the form of pension
plans, individual retirement plans, etc. Annuities have proved to be an
effective economical method).
A Structured Settlement recognizes immediate cash needs. It also recognizes
that future needs are best funded by annuities which take advantage of the
earning power of the dollar stretched over a period of time.
The recipients of the Structured Settlement dollars benefit from the lifetime
guaranteed benefits that can be provided, the tax free stream of income, the
freedom from reinvestment worry and the safety from dissipation of needed
funds.
As inflation and legal awards continue to escalate, Structured Settlements
based on annuity programs are more financially attractive for resolving
expensive claims and provide significant benefits to all parties involved: the
corporate defendant, the claimant/recipient and the casualty company.
ADVANTAGES TO THE CLAIMANT/RECIPIENT
- Life long financial security through guaranteed periodic income payments that can be designed to provide for the future needs of the claimant or the claimant's family.
- Up-front settlement funds supply cash for specific immediate needs.
- Substantial tax savings. Annuity income payments from a personal injury settlement are totally tax free. (H.R. 5470)
- Sound investment management relieves the claimant of the burden of investing and managing large sums of money. All long range settlement funds are underwritten and managed by A.M. Best A+ rated life insurance companies.
- Protection from unscrupulous outsiders because annuities cannot be pledged, assigned, encumbered or transferred to other parties.
ADVANTAGES TO THE PROPERTY AND CASUALTY COMPANY:
- Realistic pricing of future benefits.
- Reduced settlement costs without eliminating agreed benefits.
- Opportunities to reduce allocated claim expenses which should improve investment results.
- Improvements in surplus and capacity.
- Reductions in the costs of reinsurance.
- Improvements in severity results.
- Improved calendar year results.
- Decreased cash flow demands which should improve investment results.
- Improved public image by eliminating the abuses found in "all cash" settlements.
- Competitive advantages in the market place through reduced costs.
- An affordable insurance product for the purchaser because of the reduced settlement costs annuities offer.
ADVANTAGES TO THE CLAIMANT'S ATTORNEY
- Fulfills immediate and long term economic needs in a way that usually maximizes benefits for the client.
- Avoids further litigation or appeals.
