What is a Structured Settlement Annuity ?
on الثلاثاء، 4 مارس 2014
What is a Structured Settlement Annuity ?
If you ever watch any TV, you’ve likely seen a commercial advertising
something to the effect of: “It’s your money and I’ll help you get it
now!” These commercials are advertising structured settlement buyouts
to people who were awarded structured settlement annuities to get more
money in their pocket instead of waiting for periodic payments.
Structured Settlement Annuities
A structured settlement annuity tax free way of providing money to a
victim who was injured in an accident and is no longer able to work.
These are usually awarded to settle a case out of court. Instead of
paying all of the damage is the case at once, the annuity is purchased
to allow periodic payments for a predetermined amount of time to help
support the victim through the recovery process.
If you’re injured in a car accident and no longer able to work, you
can sue the driver who caused the accident. Rather than suing the
driver, you’re actually suing the insurance company who provides his or
her liability insurance.
- The driver’s auto insurance company purchases an annuity for the amount you settle for, from a life insurance company.
- The insurance company owns the annuity and names you as the annuitant, or the beneficiary of the annuity.
- The annuity gives you payments as per the agreement. Sometimes the annuity will have cost of living increases built in, to help the money continue to provide support for years to come.
What are the Features of a Structured Settlement Annuity?
Structured settlement annuities are tax-free income
disbursements.These annuities are funded by large, well-financially
backed insurance companies, so the recipient typically does not have to
worry about what will happen to the settlement if the company who funds
it goes out of business.
Structured settlement agreements must be approved by the court to
protect the plaintiff. Features will vary depending on the insurance
company that buys the annuity, and where they buy it from. Some of them
will offer a lump sum payment in conjunction with periodic payments,
while others will offer periodic payments that increase or decrease over
time.
Lump Sum vs. Periodic Payments
Lump sum means you’ll get a percentage of your settlement on a
certain date. Periodic payments mean you will get a certain amount of
money every month for a certain number of years (sometimes for life) as
per the annuity agreement.
Can I have a lump sum and periodic payments?
Yes, some annuities do allow for this. The lump sum is given at the
beginning to help you with legal fees and medical bills, while the
periodic payments are intended to support you while you cannot work.
If you have any questions or concerns about structured settlement
annuities, talk to an experienced lawyer in your area. If you already
have one and are interested in selling all or part of your remaining
payments for a lump sum of cash, then you will still need to talk to a
lawyer, because all transfers of annuities must be approved by the
court.
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