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FAQ for Claim Professionals
  1. Introduction
  2. What is a Structured Settlement?
  3. Why would a claimant want one?
  4. Why wouldn't they want one?
  5. How can the claimant manage the disadvantages?
  6. Why does my company want me to use them?
  7. Which kinds of cases are good candidates for structures?
  8. Which cases are not?
  9. What about case size?
  10. How do I get started?
  11. What's a typical negotiating scenario?
  12. What if the Claimant says no?
  13. Approved annuity issuers
  14. Why annuities?
  15. Annuity Pricing
  16. Reduced life expectancy discounts
  17. What is an "assignment"?
  18. Structure of the deal
  19. Insurance company ratings
  20. The closing process
  21. What do settlement brokers do?
  22. How are brokers paid?
  23. What if the claimant has their own broker?
Home Page > "How to" For Claims Professionals>ABC's

Reduced Life Expectancy Discounts

Any case in which the plaintiff suffers from a life-shortening medical condition holds the potential for a price discount. Since life annuities are priced based on standard life expectancy tables, any reduction in life expectancy means a reduction in the number of payments the insurance company expects to make. This translates into either lower cost or higher benefits.

The condition need not be related to the claim, but it must be a documented condition that the annuity company has reviewed in advance of funding.

To consider such a discount, annuity companies engage in what's known as "medical underwriting". They review the plaintiff's medical records and assess to what degree they feel life expectancy has been compromised. That factor is then discounted in the pricing.

To apply for such a discount, you must provide your broker with copies of current medical records (within one year) that describe the plaintiff's condition. Also, you should provide your broker with any life care plan that has been prepared or submitted. The broker will then survey the annuity markets to see what, if any, discounts companies are willing to give and report back to you.

The size of these discounts can be substantial. In the most severe cases, it is not uncommon for seriously injured plaintiffs to boost their future benefits by 50-100% or more. Chronic medical conditions such as diabetes or hypertension should definately be mentioned to your broker. [click here for a list of common conditions likely to qualify for discount pricing.]