A structured settlement annuity is a complex legal settlement that should be handled and explained by a qualified lawyer. In simple terms, a structured settlement annuity is an annuity that will be paid to an injured person or party instead of a large lump sum of money.
These type of settlements are quite unique because the injured party never actually owns the annuity. The insurance company that is providing the settlement is the owner of a structured settlement annuity.
The injured party will receive continual payments which are determined by the specific annuity that the insurance company has purchased. When someone has been injured in an accident whether it be an automobile accident, an accident at work, or an accident in a public place, they will be involved in some type of a settlement case.
Not all of these cases go to trial but they are often settled between the guilty party’s insurance company and the injured party. An insurance company may decide to settle this type of claim by means of a special kind of annuity. This annuity will allow the injured party to receive a steady income for a set period of time which is normally for their lifetime.
For example, let’s say that a man is involved in an accident whereby he crashes his motor vehicle into a woman’s car. The woman is badly injured and is no longer able to do a variety of things such as work at her job, housework, and so forth. This woman decides to sue the man but in reality she is suing the man’s car insurance company who has provided the man with liability insurance.
Let’s say for example that the man’s insurance company and the woman settle for $20 million. The $20 million will cover all current and future medical costs, rehabilitation, and other expenses.
However, the insurance company decides that they would like to pay the woman with a special annuity rather than providing her with a lump sum of $20 million. The annuity issued by the insurance company will name the woman as the annuitant. The woman will never actually own this special annuity but rather it will be owned by the man’s insurance company.
This type of special annuity may provide the woman with monthly payments for life. The annuity may also provide the woman with a smaller lump sum of money at various intervals. The reason for the smaller lump sum’s of money may be because of things such as cost-of-living increases. The main benefit of this type of annuity is that the woman will now have dependable financial support for the rest of her life.
There are a few facts that a person should know about a structured settlement annuity. The first fact is that these type of annuities are tax-free and they are often encouraged by the federal government.
These type of annuities are also popular for anyone who is under the age of 18. This will allow the minor to keep their money safe until they reach an age where they are old enough to manage their own affairs. You will also find this type of annuity for any plaintiff who has been deemed questionable to manage their money responsibly.
These are just a few of the key facts about structured settlement annuities but as mentioned previously it is advisable to talk to a lawyer before considering choosing this type of settlement.