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FAQ for Injured Persons
  1. Introduction
  2. What Do I Need To Know?
  3. How Big is the Tax Break?
  4. How Secure Are The Payments?
  5. How Do Structures Compare With Other Investments?
  6. What Are the Disadvantages?
  7. When Would I Get My Money?
  8. What Have Other People Done?
  9. How Do I Get Started?
  10. How Flexible Are The Design Options?
  11. What Is A "Settlement Broker"?
  12. Who Pays Them?
Home Page > "How to" For Injured Persons >FAQ

How Do Structure Returns Compare To Other Investments?

Due to the tax break, structures will generally deliver a higher net rate of return than conventional investments of the same risk and quality. 

Comparison to bonds:

  • "Fixed" structured settlements will generally pay higher interest rates outright than municipal bonds of comparable quality. They will also beat corporate and Treasury bonds by a wide margin since both these types of bonds are taxable.

  • Structured settlements offer greater design flexibility than bonds. Whereas bonds pay interest only twice a year and rarely for longer than 25 or 30 years, structured payments can be scheduled to pay more frequently (monthly, quarterly, etc.) and for much longer periods: 50-60 years, even life.
  • The returns on "fixed" structured settlement rates are truly "locked in" for the full period; that's not the case with most bonds. The majority of bonds sold today come with something known as a "call feature" that permits the bond issuer to redeem the bonds early if interest rates decline. This is bad news for you because then you have to reinvest your funds in a lower interest rate environment. Structured settlements can't be "called in" early.

Comparison to stocks (physical injury only):

  • The ability to tie structured settlement payments to the performance of an investment portfolio is a recent development and important breakthrough.

  • The investment choices are limited but do include broadly diversified portfolios of large company stocks (S&P500 Index fund, etc.).

  • Having both fixed and growth options available permits you to adopt the classic "balanced approach" to long term funds management and offers superior diversification and inflation protection.

  • Most important of all: since these payments are received within an IRC Section 104-qualified structured settlement, the returns are fully shielded from taxes on capital gains and dividend income—a major advantage unavailable via any conventional investment vehicle or trust.