The Settlement Alliance

What Makes Structured Settlements a Wise Choice for Claimants?

What Makes Structured Settlements a Wise Choice for Claimants?

Mar 21, 2017

You may have heard that receiving your personal injury settlement proceeds in the form of a structured settlement annuity may be a safer option than accepting a lump sum.  Structured settlements can offer claimants many protections and advantages that lump sums can’t.  Here are a few characteristics that make structured settlements one of the most reliable investments on the market:

#1: Income Tax Advantages

With the exception of punitive damages and attorneys’ fees, awards from a personal injury settlement are income tax-free.  When a structured settlement is in place, any interest earned on the funds is also income tax-free. For point of comparison, if the lump sum settlement proceeds are placed in a traditional investment vehicle (mutual funds, for example), interest earned on those funds may be subject to state and federal income tax.

#2: Fixed, Yet Flexible Payment Schedules

When planning a structured settlement schedule, the claimant’s future medical, financial and personal needs should be researched and considered by a settlement planner.  Every structured settlement payment schedule is unique, so it’s important to design a schedule that works for the claimant.  Here are some examples:

  • Large up-front cash payment, with smaller payments for the life of the annuity
  • Equal payments over time
  • Payments that increase (or decrease) over time
  • Delayed payments that start at a certain age
  • Payments that incorporate lump sums for certain life events (e.g. college tuition, purchasing a home, retirement, etc.)

In addition to providing a stable source of income, the fixed nature of structured settlements also helps protect the funds from family members seeking handouts, theft, overspending, financial planners with their own agendas, and claimants making uninformed financial decisions.

#3: Investment Security

When a claimant elects to use a structured settlement, the rate of return on that settlement is locked in. That means that even if the market takes a dive, the funds in the structured settlement will still continue to grow at their original rate of return—tax-free.

#4: No Management or Administrative Fees

Unlike traditional investments, there are no administrative or management fees associated with structured settlements.  The lack of fees, combined with the guaranteed rate of return, allow structured settlements to remain competitive with traditional open market investments.

Contact Us Today

A carefully planned structured settlement can help ensure that the settlement funds are there when you need them. Our settlement planners have decades of experience assisting claimants with structured settlements, and can create a personalized plan to protect your settlement proceeds.  Contact us today at info@settlement-alliance.com or call 800-464-2500.

We are proud to partner with the highest rated structured settlement providers in the industry:

  • American general Life Companies
  • Berkshire Hathaway Structured Settlements
  • Liberty Life Assurance Company of Boston
  • MetLife
  • Mutual of Omaha
  • New York Life
  • Pacific Life
  • Prudential