Structured Settlement Annuities: A Comprehensive Guide to Secure Your Future



Structured settlement annuities have emerged as a popular financial option for individuals seeking stable and long-term income solutions. Whether received through a legal settlement, lottery win, or other significant payout, structured settlement annuities offer a smart way to secure your financial future. In this article, we will delve into the details of structured settlements annuities, their benefits, and how they can provide a reliable source of income for years to come.

Understanding Structured Settlement Annuities

Structured settlement annuities are financial arrangements that involve receiving a series of periodic payments over an extended period. Typically, these annuities are designed to compensate individuals for personal injury claims, medical malpractice cases, or other legal settlements. Instead of receiving a lump sum, the recipient is paid in regular installments, providing financial stability and safeguarding against potential mismanagement of funds.

How Structured Settlement Payments Work

When an individual is awarded a structured settlement, they have the option to receive their settlement in a variety of ways. The most common method is through an annuity, which is issued by a reputable insurance company. The annuity is funded with the settlement amount, and the insurer guarantees periodic payments based on the agreed-upon schedule. These payments can be monthly, quarterly, annually, or customized to suit the individual’s financial needs.


Benefits of Structured Settlement Annuities

a. Guaranteed Long-Term Income: One of the most significant advantages of structured settlement annuities is the assurance of a steady stream of income for an extended period. This financial security can be especially crucial for individuals unable to work due to injury or those seeking a reliable retirement income.

b. Tax Advantages: In many cases, structured settlement payments can offer tax benefits. When set up correctly, the periodic payments may be tax-free, providing additional financial advantages to the annuitant.

c. Protection from Impulsive Spending: By receiving payments over time, annuitants are less likely to make hasty financial decisions, ensuring the funds are preserved for their intended purpose.


d. Customizable Payment Plans: Structured settlement annuities offer flexibility in designing the payment schedule according to an individual’s unique financial requirements.

Investing in Your Future

Structured settlement annuities can also be used as an excellent investment tool. The regular payments can be strategically utilized to fund retirement plans, college education, or other long-term financial goals. Additionally, some annuities offer options for beneficiaries, ensuring that loved ones are taken care of in case of an untimely demise.


Structured settlement annuities provide a secure and dependable method for managing substantial payouts, providing peace of mind for recipients and their families. Whether you are considering structured settlements for a legal settlement or exploring long-term financial options, annuities can serve as a powerful tool to safeguard your financial future. By securing steady income, enjoying tax benefits, and protecting against impulsive spending, structured settlement annuities offer a path towards financial stability and long-lasting prosperity. Consult a financial advisor to explore how structured settlement annuities can be tailored to meet your specific needs and goals.


Potential for a Structured Settlement Industry Shake-Up: The ‘Cordero’ Appeal

There is an entire industry that has existed in our country for many years where personal injury victims and wrongful death survivors who settled tort cases by way of “structured” settlement (as opposed to an all-at-once lump sum) have sold or assigned their future structured settlement payment rights to third-party purchasers, at high interest rates, for what can end up as mere pennies on the dollar.

You can hear the decades-old television jingle and see the motley crew of opera singers as clear as a bell: “I have a structured settlement and I need cash now.” For most readers, your knowledge of structured settlements stops there. But there is an entire industry that has existed in our country for many years where personal injury victims and wrongful death survivors who settled tort cases by way of “structured” settlement (as opposed to an all-at-once lump sum) have sold or assigned their future structured settlement payment rights to third-party purchasers, at high interest rates, for what can end up as mere pennies on the dollar.

Lesser known, perhaps, is that for explicit tax purposes, structured settlement annuities are not owned by the tort victims themselves, also known as the “payees.” The payees have a right to receive the structured settlement payments as they come due contractually, but they otherwise have no right to annuity ownership under the U.S. Tax Code. Rather, the contracts are, for the most part, subject to “qualified assignment,” and are owned and issued by top-rated insurance companies. These insurance companies have the obligation to make the payments, when due, by contract. No annuity contract provides that any payee has any right to assign, or “factor” their payments, yet payees do so by the tens of thousands each year. Although all 50 states now have their own version of a structured settlement protection act (SSPA) that functions as a consumer protection statute for payees, many factoring transactions are approved by courts without much inquiry. Indeed, most state legislatures have not revisited their SSPAs in decades, and many judges often feel as though it is the payee’s decision whether to take a financial haircut to get “cash now.” Judges have little guidance from their state lawmakers or common law as to what proper inquiry into a structured settlement transfer might even look like.


Pursuant to the SSPAs, the owners and issuers of the annuity contracts are deemed statutory “interested parties.” Sometimes “interested parties” could be contractual beneficiaries or underlying attorneys. And most SSPAs only require that the interested parties receive notice of the petitions that are filed by third-party factoring companies, but there are no other requirements imposed upon the owners and issuers to do anything affirmative when such a petition is received. This “notice” requirement is not always checked by the courts. There are transfer petitions that take place where the owner and issuer have not received notice of the petition at all; they might just receive payee change court orders in the mail. Interested Parties have no obligation, by statute or otherwise, to intervene in any factoring transaction.

The factoring industry changes each year. More factoring companies enter the scene with the idea of getting rich quick. This creates great competition amongst the purchasers of structured settlements, each now desperate to land the “big deals” that provide them with substantial guaranteed earnings far into the future. It is now the norm for factoring companies to compete rampantly for the same payments, with up to half dozen petitions filed for the same payees, looking to buy the same payments, at the same time. Some SSPAs require very short notice periods, and so a petition can be filed with a hearing scheduled just days later. With these sorts of unsavory fast-paced happenings, it can be impossible for insurance companies to keep up with the volume of factoring cases filed in the United States each year. The potential expense and time commitment of needing to formally object to each factoring petition filed in every county in the United States would be astronomical. For many reasons, most factoring petitions are not formally opposed by any “interested parties,” and judges across the country approve them.

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