Structured Settlement Annuities: All You Need to Know

Structured Settlement Annuities

Life is uncertain and nobody knows what is going to happen the next moment. To help with unexpected circumstances, insurance companies offer various products.

Structured settlement annuities are an affordable way and it provides tax-free periodic payments over time according to the terms specifically for the personal injury cases, worker’s compensation claims, wrongful death, etc.

Following given are some of the questions and answers to them that will help you understand various things about structured settlement annuities.

1. What is a Structured Settlement Annuity?

A structured settlement annuity is a contract that an insurance company issues to the person as a part of a structured settlement. The company makes payments to the person for a fixed time at a fixed rate in case of personal injury, accidental death, etc. The annuitant pas fixed sum of amount while making the settlement.

2. Who makes the Payments?

The structured annuity payment is made to the claimant by the US-based insurance company having a standard credit rating of AAA to A.

3. How is the Interest Rate Determined?

The structured annuity rate is an effective rate as it is decided according to the market. Generally, the rate is quite higher than the rate offered by the traditional annuity rate as the annuity is not previously owned with attributes like payment amount, payment term, etc.

See also  The Hartford Employee Account Login: Insurance Claim Form and Phone Number

4. What are the benefits of Investing in Structured Settlement Annuities?

When you invest in structured settlement annuities, the insurance company invest your money in government securities and corporate bonds having good grade. You get above average return for the fixed income of your balanced portfolio.

In case of premature death, the designated beneficiaries get future tax-free payments.

You can schedule payments for any length of time and they can begin immediately or can be deferred for any number of years.

Structured settlements are guaranteed and not dependent on market fluctuations.

Capital gain, as well as interest, is exempted from state, federal, or local taxes.

5. What are the risks associated with Structured Settlement Annuities?

There is always some risk associated with it. The financial health of the insurance company that provided it does matter. There are no warranties as to such with the fixed deposits. The interest rate changes and as such a risk is always associated with it.

Foreign buyers run the risk of currency exchange. The annuities are for specified terms and as such no investment liquidity. So there is no flexibility and you can’t take advantage of a situation that changes.

You don’t get access to the fund in case of an emergency. If you surrender, you have to pay surrender charges.

If you buy an immediate annuity, you don’t get the option of a lump-sum payment.

6. Do minors get the Annuity?

The minors may get payments through structured payments if an accident or personal injury takes place. The payments are made in such a way that it ensures long terms necessities of the minors such as food, clothing, shelter, medical care, etc.

See also  AAA Auto Insurance Quote Online: Access Full Site Login

If you go through the pros and cons of structured settlement annuities, you will realize that the benefits overweighs and make the future financially safe from personal injuries, sudden death, or even compensation by buying settlement security annuities get relaxed! Read more articles on wink24news.

Leave a Comment