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FAQ for Trial Attorneys
  1. Introduction
  2. What is a Structured Settlement?
  3. Advantages to the Plaintiff
  4. Disadvantages to the Plaintiff
  5. Managing the Disadvantages
  6. Appropriate Cases
  7. Inappropriate Cases
  8. Case Size
  9. Why Annuities?
  10. Annuity Pricing
  11. Reduced Life Expect. Discounts
  12. What is an "Assignment"?
  13. Structure of the Deal
  14. Insurance Company Ratings
  15. The Closing Process
  16. What Settlement Brokers Do
  17. How Are SS Brokers Paid?
  18. If the Defense Has Their Own Broker, How will My Broker Be Paid?
Home Page > "How to" For Plaintiff Attorneys >ABC's

Structured Settlement Advantages

  • Tax-advantaged Income Payments received on account of personal physical injury or physical sickness are entirely excluded from gross income under Internal Revenue Code Section 104. Non-physical injuries may be tax-deferred if properly structured. This is true whether the money is received as a lump sum or as periodic payments. Money saved on taxes translates directly into higher net income for claimants.

  • Financial Security Future income is guaranteed for certain periods of time and/or for life, depending on need. The annuity contracts used to back structured settlements are issued only by life insurance companies with top-tier credit ratings.

  • Spendthrift Protection Since payments are delivered in measured doses, recipients are protected from undisciplined spending. With proper planning you can ensure that claimants will have money for years to come, safe from financial mistakes and settlement predators.

  • Design Flexibility Future payments can be tailored to meet specific future economic needs, such as wage replacement, medical care, college funding and/or retirement.

  • Lifetime Payments While most people naturally consider the risk of early death, many face the risk of living too long— specifically, outliving the amount of money set aside for their care. Annuity contracts are the only investment vehicles that address longevity risk. By purchasing lifetime benefits, you can shift the risk of living too long from the injured person to the annuity issuer.

By eliminating or reducing the tax on investment income, structured settlements effectively increase the claimant’s purchasing power beyond what is possible through conventional investment of a lump sum. They represents a unique financial advantage when done correctly and in appropriate proportion.