What are the other benefits of Structured Settlement Annuity?

The Benefits of a Structured Settlement Annuity

A structured settlement annuity is an excellent vehicle for those who are receiving a personal injury settlement and want to receive income on a monthly or annual basis . This article will look at the basics of a structured settlement annuity, and explain what makes it a valuable tool when allocating a client’s settlement money.

When properly constructed, structured settlements provide a variety of benefits to beneficiaries. As a starting point, they can protect the person by helping to ensure that the settlement award does not expire early, which can be a risk if the family is not used to having significant assets or the future. I am suffering from financial problems.

Similarly, by providing a steady stream of income, structured settlements offer a layer of protection against poor investment decisions. Finally, structured settlements are tax-free and more difficult for creditors and ex-spouses to access.

However, structured settlements are not necessarily the best option for everyone. In some cases, an injury victim may need more money than before — for example, if the person’s family needs to remodel the home to accommodate the person’s disability, or special equipment. Need help to buy or pay for educational expenses. Because of these situations, many special needs planners recommend a hybrid approach, where the settlement makes large payments at various points during the beneficiary’s life, such as to pay off anticipated liabilities. Periodic lump sum payments on specified dates.

Another disadvantage is that the return on a structured settlement annuity is fixed at the time it is purchased, meaning you are locked into prevailing interest rates. This will be less favorable due to the low interest rate environment in recent years.

A major drawback of a structured settlement is that it can jeopardize a beneficiary’s eligibility for public benefits, which can be especially problematic when the person’s medical needs are covered by Medicaid rather than private health insurance. To be completed through

To maintain eligibility, beneficiaries should consult their special needs planner for guidance in setting up a “first party” special needs trust. These trusts can be used to maintain beneficiary eligibility while receiving either a lump sum payment or a structured settlement if the payment is made payable to the trust. However, like other trusts, this trust, otherwise known as a “payback” trust, must contain an arrangement that allows the trust to pay Medicaid-funded benefits incurred during the trust beneficiary’s lifetime. Require reimbursement from your state Medicaid program for expenses.

What is the Main Benefit of a Structured Settlement Annuity? A structures settlement annuity is designes to spread the settlement over a period of time:

  • Replace the income of someone who can no longer work
  • To provide for the payment of college for a minor, or
  • Provide for paying for college, and then a lump sum to move forward in life
  • Fund future needs and goals.

Because payments are spread out over time, one of the main benefits of a structures settlement annuity is that the annuity provides protection against loss . This means that it prevents a client from getting a lump sum and wasting it to the point where they have nothing left to live on.

What are the other benefits of Structured Settlement Annuity?

Another advantage of a structured settlement annuity is that it can be designed to pay in almost any manner so that payments can be tailored to the client’s needs for the foreseeable future. Similarly, a structured settlement annuity also has the flexibility to cover future expenses with future income.

The Benefits of a Structured Settlement Annuity

As with interest, anything earned within a structured settlement annuity is also tax-exempt. This means that for clients who are older, or perhaps in a higher tax bracket , or have taxable income from another retirement plan, a structured settlement annuity can make their wealth tax efficient. Can help—and get paid. The rest of the customer’s life.

Structured settlement annuities are offered and guaranteed by some of the world’s largest insurance companies, such as MetLife, New York Life, Pacific Life, and Berkshire Hathaway . By working with financially strong companies, clients can be sure that whatever happens in the financial markets, the annuity will be paid out.

What are the disadvantages of Structured Settlement Annuity?

Although structured settlement annuities offer many advantages, they also have several disadvantages, such as:

  • Once funded, the systematic settlement annuity cannot be accelerated or changed for any reason.
  • Once they are established, rates of return are quite low, especially in this interest rate environment (although rates have been improving recently).

  • The only way to access liquidity from a structured settlement annuity is to sell all or part of the future payments. More commonly known as “factoring,” annuitants are typically required to sell their future payments at a discounted lump sum.

Should you obtain a structured settlement annuity for your client?

In many situations, structured settlement annuities make a lot of sense for a client to set up. If you have clients who you believe may need lifetime income or income replacement . or who may benefit from loss protection that Structured Settlement Annuities provide, please call Use the button below to schedule. We can help develop a plan that fits your client’s needs.

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