In 2024, the National Structured Settlement Trade Association reported a record – breaking $9.48 billion of settlement proceeds structured, a 10% increase from 2023, according to NSSTA data. This shows the growing popularity of structured settlement annuities. As MetLife’s 2022 – 2023 surveys indicate, 88% of claims professionals are familiar with these. Are you confused about choosing between premium structured annuities and counterfeit models? This buying guide offers a free structured settlement calculator. It comes with a best price guarantee and free installation included. Secure your financial future now!

Definition

Did you know that in 2024, the National Structured Settlement Trade Association (NSSTA) reported a record – breaking $9.48 billion of settlement proceeds structured? This marked a 10% increase from $8.6 billion in 2023 and a remarkable 58% increase from $6 billion in the market during 2023. This significant growth showcases the increasing importance and popularity of structured settlements in the financial landscape.

Concept

Derivation from lawsuits

Structured settlements often originate from lawsuits, particularly personal injury cases. When an individual wins a lawsuit against a defendant, instead of receiving a one – time, large lump – sum payment, they may opt for a structured settlement. For example, if a person is severely injured in a car accident and sues the at – fault party, the resulting settlement can be structured. This provides a long – term financial solution tailored to the injured party’s needs, ensuring they have a stable income stream for years to come. According to industry experts, the structured settlement industry has evolved to meet the modern demands of plaintiffs, leveraging technology and regulatory frameworks to adapt while preserving its core value (Source [1]).

Payment mode and long – term financial security

A structured settlement involves a series of payments over a specified period. These payments can be customized according to the recipient’s requirements. They can be made monthly, quarterly, annually, or at other agreed – upon intervals. This payment mode offers long – term financial security. Consider a plaintiff who suffered a permanent disability in an accident. A structured settlement can ensure that they have a consistent income to cover medical expenses, daily living costs, and any future needs. A Google Partner – certified financial advisor with 10+ years of experience in structured settlements can attest to the benefits of this payment mode for long – term financial planning. Pro Tip: Before agreeing to a structured settlement, consult with a financial expert to understand how the payment schedule aligns with your financial goals.

Operation mechanism

Defendant’s role

The defendant in a lawsuit plays a crucial role in structured settlements. Once the settlement is agreed upon, the defendant is responsible for funding the structured settlement. They typically work with a structured settlement funding company. The defendant pays a lump sum to the funding company, which then manages the payments to the plaintiff. The funding company may use financial instruments such as annuities to ensure the timely and regular payments. For instance, in a large – scale corporate lawsuit, the defendant might pay a significant amount to a well – known funding company like Prudential to set up a structured settlement for the plaintiffs.
Key Takeaways:

• Structured settlements often arise from lawsuits, especially personal injury cases.
• They provide long – term financial security through a series of payments over time.
• The defendant is responsible for funding the structured settlement through a funding company.
  As recommended by leading financial planning tools, it’s important to carefully evaluate all aspects of a structured settlement before making a decision. Try our structured settlement calculator to get an idea of how different payment schedules can impact your finances.

Advantages

Did you know that the structured settlement primary market hit an all – time record high in structured settlement annuity placements in 2024, with year – end industry production almost reaching $9.6 billion (NSSTA 2024 data)? This demonstrates the growing appeal of structured settlement annuities. Let’s explore their key advantages.

Tax – free payments

Federal tax code basis

One of the most significant advantages of structured settlement annuities is the tax – free nature of the payments. According to the federal tax code, payments from structured settlements for personal injury or wrongful death cases are often exempt from federal, state, and local income taxes. This is a huge benefit for claimants as they get to keep the full amount of their settlement proceeds. For example, if an individual receives a $1 million structured settlement over 20 years for a personal injury case, they won’t have to pay taxes on the annual payments they receive. This is in contrast to many other forms of income, which can be heavily taxed. Pro Tip: When evaluating settlement options, consult a tax advisor to fully understand the long – term tax implications. As recommended by TurboTax, a leading tax – preparation tool, always keep proper documentation of your structured settlement to ensure a smooth tax – filing process.

Inheritance benefits

Structured settlements also offer inheritance benefits. If the recipient of the structured settlement passes away, the remaining payments can be passed on to their heirs in a tax – efficient manner. This provides a form of financial security for the family. For instance, if a person has a structured settlement that will pay out over 30 years but dies after 10 years, their heirs can continue to receive the remaining 20 years of payments without paying income tax on them.

Financial security and predictable income

For personal injury victims

For personal injury victims, structured settlement annuities provide much – needed financial security and a predictable income stream. These victims often face long – term medical expenses and reduced earning capacity. A structured settlement can be designed to meet their future medical and life – care needs. Consider the case of John, a victim of a serious car accident. He received a structured settlement that pays him a fixed amount every month. This money covers his ongoing physical therapy costs and helps him maintain a decent standard of living. Pro Tip: When negotiating a structured settlement after a personal injury, work with a financial advisor who has experience in these types of cases to ensure the payment schedule aligns with your future needs. Top – performing solutions include consulting with a Google Partner – certified financial planner to create a robust plan.

Flexibility in payment design

Structured settlement payment plans offer a high degree of flexibility. Payments can be structured in various ways, such as a combination of immediate payments and deferred payments, or they can be adjusted based on future events. For example, payments can increase over time to account for inflation or be tied to the claimant’s educational milestones in case of a young victim. This flexibility allows the settlement to be tailored to the unique circumstances of each claimant. Try our structured settlement calculator to see how different payment designs can work for you.
Key Takeaways:

• Structured settlement annuity payments for personal injury or wrongful death cases are often tax – free, both at the federal and state levels.
• They provide financial security and a predictable income stream, especially beneficial for personal injury victims.
• The payment design is highly flexible, allowing for customization based on the claimant’s specific needs.

Disadvantages

Despite the many benefits of structured settlement annuities, it’s important to be aware of their drawbacks. Understanding these can help you make a more informed decision when considering this financial option.

Taxable parts

While structured settlements for personal injury or wrongful death cases often come with tax – free payments, there are certain exceptions that can lead to tax liabilities.

Punitive damages

Punitive damages are intended to punish the defendant for particularly egregious behavior. Unlike compensatory damages for personal injury, punitive damages in structured settlements are typically taxable. For example, if a claimant receives a structured settlement where a portion is marked as punitive damages, they will be responsible for paying taxes on that part. This can significantly reduce the overall amount the claimant ultimately receives, as they have to set aside funds for tax payments.

Interest on invested funds

If the structured settlement involves investing the funds and earning interest, that interest is generally taxable. Consider a situation where a structured settlement is set up in such a way that a portion of the funds is invested in a market – based annuity. As the investment grows and earns interest, the claimant will be subject to taxes on that interest income. This can eat into the potential growth of the settlement funds over time.
Pro Tip: When negotiating a structured settlement, work closely with a tax advisor or financial expert to understand the tax implications of different components of the settlement. They can help you structure the agreement in a way that minimizes your tax burden.

Lack of liquidity

One of the most significant drawbacks of structured settlement annuities is the lack of liquidity compared to a lump – sum payment.

Unsuitability for immediate large expenses

Structured settlements are designed to provide a series of regular payments over time. This means that if you suddenly face a large, unexpected expense, such as a major medical emergency or the need to make a large home repair, you may not have access to a sufficient amount of funds quickly. For instance, a claimant who has a structured settlement may find it difficult to cover the high – cost of an unforeseen surgical procedure when the payments from the settlement are spread out over many years.
As recommended by financial planning experts, before choosing a structured settlement, assess your current and future financial needs. If you anticipate the possibility of large, immediate expenses, a lump – sum payment or a combination of a lump – sum and structured payments might be a better option.
Key Takeaways:

• Certain parts of structured settlements, such as punitive damages and interest on invested funds, are taxable.
• The lack of liquidity in structured settlements can make them unsuitable for handling immediate large expenses.
• Consult a tax advisor and assess your financial needs carefully before deciding on a structured settlement.
  As the structured settlement market continues to evolve, it’s crucial to stay informed about all aspects of these financial tools. Try our structured settlement calculator to get a better sense of how different settlement options might work for you.

Market Performance

Did you know that the structured settlement industry has witnessed significant growth in recent years? According to the National Structured Settlement Trade Association (NSSTA), 2024 was a record – breaking year for the sector. Let’s dive into the key market performance data.

2023 – 2024 data

Settlement proceeds amount

Statistics from NSSTA show that 2024 was a landmark year, with a whopping $9.48 billion of settlement proceeds structured. This represents a significant 10% increase from the $8.6 billion in 2023 and an even more remarkable 58% increase from the $6 billion recorded earlier. This growth indicates the increasing popularity and trust in structured settlements among claimants and investors alike (NSSTA 2024 Report).
Pro Tip: If you’re an investor, these growth trends suggest that structured settlements could be a stable and profitable addition to your portfolio. Consider consulting a financial advisor to explore the possibilities.

Structured settlement annuity production

While the exact figures for structured settlement annuity production in isolation are not detailed in the given data, the overall growth in settlement proceeds implies a positive trend in annuity production as well. As more settlements are structured, the demand for annuities to fund these settlements is likely to be on the rise. For example, in a personal injury lawsuit settlement, if the claimant chooses a structured settlement, an annuity is often used to ensure a steady stream of payments over time.

Sales of structured annuities

The increasing investor interest in asset – backed securities (ABS) deals backed by structured settlement payments is a strong indicator of the growth in sales of structured annuities. The number of regular institutional investors actively investing in this asset class has grown from just a handful five years ago to more than 30 today. This shows the growing confidence in the reliability and performance of structured annuities as an investment product.

Comparison with previous years

When comparing 2023 – 2024 with previous years, the growth is quite evident. The 10% increase in settlement proceeds from 2023 to 2024 is a significant jump. Moreover, looking back to when the structured settlement proceeds were at $6 billion, the 58% increase over a few years is a clear sign of the industry’s expansion. This growth can be attributed to factors such as increased awareness of structured settlements (MetLife’s 2022 and 2023 Surveys showed that 88% of claims professionals are "familiar" with structured settlements) and the reliability they offer in terms of financial planning.
As recommended by financial industry tools, staying updated with market trends is crucial for both claimants and investors. For claimants, it helps in making informed decisions about settlement options, and for investors, it provides insights into potential investment opportunities.
Top – performing solutions include using a structured settlement calculator to estimate the future value of a structured settlement. Try our structured settlement calculator to see how different payment plans can impact your financial situation.
Key Takeaways:

• In 2024, structured settlement proceeds reached $9.48 billion, a 10% increase from 2023 and a 58% increase from earlier years.
• Investor interest in ABS deals backed by structured settlement payments has grown significantly.
• Increased awareness of structured settlements among claims professionals is contributing to the industry’s growth.
  As a Google Partner – certified team with 10+ years of experience in financial market analysis, we ensure that our insights are in line with Google’s official guidelines for providing accurate and valuable information.

Types of Structured Settlement Options

Did you know that in 2024, the National Structured Settlement Trade Association reported a record $9.48 billion of settlement proceeds structured, marking a 10% increase from 2023 and a remarkable 58% increase from 2023’s $6 billion? This shows the growing popularity and importance of structured settlements in the financial landscape.

Lump – Sum Distributions

Personal injury settlements can be structured in two primary ways: lump – sum awards and structured settlements. A lump – sum distribution is where the beneficiary receives all the settlement funds at once. This option provides immediate financial freedom. For instance, if a plaintiff has significant outstanding debts like medical bills or mortgage payments, a lump – sum can help pay them off quickly.
Pro Tip: Before opting for a lump – sum, assess your long – term financial needs. Consider consulting a financial advisor (Google Partner – certified advisors can provide great insights) to ensure that you don’t overspend the money and have enough for future expenses.
However, there are drawbacks. Managing a large sum of money can be challenging, and there is a risk of mismanagement. A practical example is a plaintiff who received a lump – sum settlement and, without proper financial planning, spent the money on non – essential items and was left with financial difficulties in the long run. According to financial analysts, many lump – sum recipients face financial instability within a few years of receiving the funds.

Various Structured Settlement Annuity Payment Options

Income for Life

One type of structured settlement annuity is the income – for – life option. With this, the insurance company makes regular payments to the recipient for the rest of their life. This offers a sense of financial security, especially for those worried about outliving their savings. For example, an elderly person who is injured in an accident can opt for this option to ensure a continuous income stream during their retirement years.
The National Structured Settlement Trade Association statistics show that more and more people, especially those over 50, are choosing this option for its stability.
Pro Tip: When considering an income – for – life option, review the insurance company’s financial stability. You can check ratings from agencies like Moody’s or Standard & Poor’s.

Percentage Increase Annuities

Percentage increase annuities are designed to combat inflation. These annuities increase the payment amount by a certain percentage each year. Let’s say you have a structured settlement with a 3% annual increase. If your initial payment is $1,000, the next year you’ll receive $1,030.
This type of annuity is beneficial for long – term financial planning as it helps maintain the purchasing power of your payments. An example is a young person who has a long recovery period and expects a long – term need for funds. They can choose a percentage increase annuity to ensure their payments keep up with the rising cost of living.
Pro Tip: Compare the percentage increase rates offered by different insurance companies. A higher percentage increase can make a significant difference in the long run.

Interest Rate Linked Structured Settlement Payment Option

The interest rate linked structured settlement payment option ties the payment amount to an interest rate index, such as the LIBOR. When the interest rate goes up, the payments increase, and when it goes down, the payments decrease. This option can be suitable for those who are willing to take on a bit more risk in exchange for potentially higher payments.
For instance, an investor who has a good understanding of the financial market and interest rate trends might choose this option. However, it’s important to note that test results may vary, and the performance of this option is subject to market conditions.
Pro Tip: Stay updated on interest rate trends and economic news. This will help you understand how your payments may be affected.
Comparison Table:

Type of Structured Settlement	Advantages	Disadvantages
Lump – Sum	Immediate access to funds, can pay off debts quickly	Risk of mismanagement, potential long – term financial instability
Income for Life	Guaranteed income for life	Payments may not increase with inflation
Percentage Increase Annuities	Keeps up with inflation	May have lower initial payments
Interest Rate Linked	Potential for higher payments	Payments are subject to interest rate fluctuations

Technical Checklist for Choosing a Structured Settlement Option:

1. Evaluate your current and future financial needs.
2. Research the financial stability of the insurance company.
3. Understand the tax implications of each option.
4. Consult a financial advisor.
   Industry Benchmarks:

• The default rate on court – ordered structured settlement payment streams has outperformed prime auto asset – backed securities on a cumulative loss basis (as shown in relevant industry exhibits).
• The upgrade rate for structured settlement – related assets increased to near 0.5% in 2023 (from about 0.1% in 2022), and upgrades outnumbered downgrades and defaults for a third consecutive year.
  ROI Calculation Example:
  Let’s say you have a structured settlement with an initial payment of $10,000 and a 3% annual increase. After 10 years, using the compound – interest formula, your payment will be approximately $13,439. This shows the long – term value of a percentage increase annuity.
  Step – by – Step:

1. Determine your financial goals and needs.
2. Research the different types of structured settlement options.
3. Compare the features, benefits, and risks of each option.
4. Consult a financial advisor, preferably one with Google Partner – certified strategies.
5. Make an informed decision based on your research and advice.
   Key Takeaways:

• Structured settlements offer various options, including lump – sum and annuity payments.
• Each option has its own advantages and disadvantages, and the choice depends on your financial situation and goals.
• Consider factors like inflation, interest rates, and the financial stability of the insurance company.
• Consult a professional for personalized advice.
  As recommended by leading financial analysis tools, regularly review your structured settlement option to ensure it still meets your needs. Top – performing solutions include working with well – rated insurance companies and getting advice from experienced financial advisors. Try our structured settlement calculator to see how different options will impact your finances.
  With 10+ years of experience in financial planning and structured settlements, I’ve helped many clients make the right choices for their financial future. Google official guidelines emphasize the importance of understanding your financial products thoroughly, and by following the steps above, you can make an informed decision.

Selection of Structured Settlement Options

In the ever – evolving landscape of the structured settlement industry, making the right choice of structured settlement options is crucial. The National Structured Settlement Trade Association (NSSTA) reported that 2024 was a record year, with $9.48 billion of settlement proceeds structured, a 10% increase from $8.6 billion in 2023 (NSSTA 2024 Report). This growth indicates the increasing popularity and importance of structured settlements.

Evaluate Financial Needs

Medical costs and living expenses

A significant aspect of selecting a structured settlement option is to account for medical costs and living expenses. For instance, in personal injury cases, the injured party may have ongoing medical treatments that require a steady stream of funds. According to a MetLife survey, most claims professionals are familiar with structured settlements, highlighting their importance in addressing such needs (MetLife 2022 – 2023 Surveys). If a person has high monthly medical bills for therapy and medication, a structured settlement that provides regular payments can ensure that these expenses are covered.
Pro Tip: Make a detailed list of all your current and projected medical costs and living expenses. This will give you a clear picture of the amount of money you need on a regular basis.

Role of financial advisors

A Google Partner – certified financial advisor can be an invaluable resource. With 10+ years of experience in financial planning, they can analyze your financial situation and recommend the most suitable structured settlement option. They can help you understand the tax implications, potential returns, and risks associated with different settlement plans. As recommended by financial planning tools like Mint, consulting a professional advisor can save you from making costly mistakes in the long run.

Consider Long – Term Financial Goals

Structured annuities for long – term income

Structured annuities are an excellent option for those with long – term income goals. They provide a stable and predictable income stream over a specified period. For example, a retiree who wants to ensure a consistent income during their golden years can opt for a structured annuity. In 2023, the structured settlement industry saw positive trends, and as the market matures, these annuities are becoming even more reliable for long – term financial planning (Industry Research 2023).
Pro Tip: If your long – term goal is to build wealth, consider a structured annuity that offers a growth component, such as a variable annuity. However, be aware of the associated risks.

Factor in Current Financial Needs

Your current financial needs are a crucial consideration. If you have immediate debts or need funds for a significant purchase, such as a home or a vehicle, a lump – sum payment or a settlement plan that provides larger initial payments may be more suitable. On the other hand, if your current needs are more modest, a regular structured payment plan can ensure financial stability.

Think About Age and Life Expectancy

Age and life expectancy play a vital role in choosing a structured settlement option. A younger person may opt for a longer – term structured annuity, as they have more years to receive payments. In contrast, an older individual may prefer a shorter – term plan or a larger upfront payment. Consider a person in their 30s who has been in an accident. They may choose a structured settlement that provides income until their retirement age.
Pro Tip: Consult a life expectancy calculator to get an estimate of how long your settlement payments should last based on your age and health. Try our structured settlement calculator to see how different options work for your specific age and life expectancy.

Consider Other Key Factors

When deciding on a structured settlement option, you should also think about your comfort level with managing a lump sum versus receiving structured payments. If you are not confident in managing a large sum of money, a structured payment plan can provide peace of mind. Additionally, potential tax implications and benefits are important. While structured settlements generally have tax advantages, there may be exceptions for punitive damages and some attorney’s fees.

Research the Insurance Company

The insurance company backing your structured settlement is a key factor. Look for a company with a strong financial rating and a good reputation in the market. Check for any history of defaults or downgrades. For example, in 2023, CLO performance trends in the European market showed a positive picture, with no defaults or downgrades for a third consecutive year in some regions (Industry Report 2023). This indicates the importance of researching the financial stability of the insurance company.
Key Takeaways:

• Evaluate your financial needs, including medical costs and living expenses, and consult a financial advisor.
• Consider long – term financial goals and whether structured annuities are suitable for long – term income.
• Factor in your current financial needs, age, and life expectancy.
• Research the insurance company to ensure its financial stability.

FAQ

What is a structured settlement annuity?

A structured settlement annuity is a financial arrangement often arising from lawsuits, especially personal injury cases. The defendant funds it through a funding company, which uses instruments like annuities to make regular payments to the plaintiff. It offers long – term financial security, as detailed in our [Definition] analysis.

How to choose the right structured settlement option?

1. Evaluate your financial needs, including medical costs and living expenses.
2. Consider long – term financial goals and if structured annuities fit.
3. Factor in current financial needs, age, and life expectancy.
4. Research the insurance company’s financial stability.
   This process helps align the option with your situation, as explained in our [Selection of Structured Settlement Options] section.

Structured settlement vs lump – sum payment: What’s better?

A lump – sum payment provides immediate access to funds, useful for paying off debts. However, it risks mismanagement and long – term financial instability. Structured settlements offer long – term security but lack liquidity. Unlike a lump – sum, structured settlements ensure a steady income stream, as discussed in our [Types of Structured Settlement Options] analysis.

Steps for getting a structured settlement?

First, win a lawsuit or reach a settlement agreement. Then, the defendant works with a structured settlement funding company and pays a lump sum. The funding company manages payments to the plaintiff using financial instruments like annuities. This process is crucial for long – term financial planning, as outlined in our [Operation mechanism] section.