If you are getting a personal injury settlement and would like to receive money on a monthly or annual basis, a structured settlement annuity is a great option. This article will go over the fundamentals of a structured settlement annuity and explain why it is a useful tool for distributing a client’s settlement money.
What is the Main Advantage of a Structured Settlement Annuity?
A structured settlement annuity is made to disperse a settlement over time in an effort to:
compensate lost revenue for a worker who is unable to work
pay for a minor’s college education, or pay for a minor’s education before giving them a big sum to start their lives with to support their future needs and objectives.
One of the key advantages of a structured settlement annuity is that it offers dissipation protection because payments are dispersed over time. This implies that it stops a customer from receiving a lump sum of cash and spending it to the point where they have nothing left over to live on.
What Are the Additional Advantages of a Structured Settlement Annuity?
Another advantage of a structured settlement annuity is that it may be created to pay in virtually any way imaginable, allowing payments to be tailored to a client’s requirements for the foreseeable future. Similarly, a structured settlement annuity offers the flexibility to let future revenue to be used to cover future costs.
Any interest accrued within of a structured settlement annuity is likewise free from taxes. This implies that for customers who are older, may be in a higher tax bracket, or have a large amount of taxable income from another retirement plan, a structured settlement annuity can help them accumulate wealth tax effectively—and it can even be paid out for the remainder of clients’ lives.
Some of the biggest insurance firms in the world, including MetLife, New York Life, Pacific Life, and Berkshire Hathaway, provide and guarantee structured settlement annuities. Clients may feel secure knowing that their annuity will be paid regardless of what happens in the financial markets by engaging with financially sound businesses.
What are the Drawbacks of a Structured Settlement Annuity?
Structured settlement annuities provide a number of benefits, but they also have a number of drawbacks, including:
Structured settlement annuities cannot be altered or expedited once they have been financed for any reason.
Once they are formed, the rates of return are rather modest, especially in the current interest rate environment (though rates have lately improved).
Selling all or a portion of the future payments is the only method to get cash out of a structured settlement annuity. Annuitants are typically compelled to sell their future payments for a reduced lump amount, sometimes known as “factoring.”
Should You Purchase a Structured Settlement Annuity for Your Client?
Structured settlement annuities are frequently quite wise to set up for a customer. Please use the button below to arrange up a call if you have customers who you believe might benefit from lifelong income, income replacement, or the dissipation protection a structured settlement annuity offers. We can assist in creating a strategy that best serves the requirements of your customer.