Structured Annuities, Inc.Side-by-side Comparison |
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| Issue/Concern | Structured Settlement | Certificate of Deposit (CD) |
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| What types of securities/ insurance products support the payments? | A fixed annuity contract issued by a life insurance company. Assets are invested in the insurance company’s general account. | A debt instrument issued by a bank. Maturity options range from a few weeks to several years. |
| Can this option provide a stable, lifetime income? | Yes. Payments and distribution schedule are determined up front. Can provide a dependable, predictable income stream that you cannot outlive. | No. Pays a fixed rate of interest that accumulates in the account for the duration of the CD. Relatively low returns and penalties for early withdrawals make CDs inefficient for providing an adequate income stream. |
| Is there a guarantee with this option? | Yes. The annuity issuer guarantees payments, as provided by the terms of the structured settlement agreement. | Yes. The Federal Deposit Insurance Corporation (FDIC) insures CD deposits (up to $100,000). The issuing bank guarantees amounts over $100,000. |
| What are the costs and fees associated with this option? | No cost to the annuitant. | No commissions apply, although there is a penalty for early withdrawal of funds. |
| Will this option keep pace with inflation? | Yes, with a Cost-of-Living-Adjustment (COLA) feature. | Unlikely, since CDs are considered a low-risk/low-yield investment. |
| What are the tax consequences? | Income provided by the fixed annuity is TAX-FREE, provided the damages received as periodic income (other than punitive damages) are the result of personal physical injuries or physical illness. | Earnings are fully taxable. |
| Is this option affected by market fluctuations? | No. Benefit payments are determined and fixed at the time the annuity contract is issued. | Yield will depend on interest rates, which are determined by competitive forces in the market. These tend to be short-term investments that may actually produce a lower income if interest rates decline. |
| Can I make changes to this option after I select it? | No. Payment amount and schedule are fixed and may not be changed or accelerated. | Although it is possible to withdraw assets prior to maturity, there generally is a penalty for early withdrawal. |
| Information provided by Hartford Life *Important Note: Neither Hartford Life nor its agents give legal or tax advice. Since tax laws are subject to change, the brief discussion of options here cannot be considered complete or necessarily up to date. Please consult your own attorney or tax advisor for more details. 6/11/99 |
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Structured Annuities, Inc. Website: www.saidot.com |
4330 West Vickery Blvd. Fort Worth, TX 76107 |
| Consult your attorney and/or accountant. We do not give tax or legal advice. | ||