Structured settlements for claimants
involved in personal injury, workers’ compensation, and wrongful death cases
offer a number of advantages, making them a desirable alternative to accepting
a cash settlement. Here are five of the top reasons to choose a structured
settlement:
1-
100% Tax-Free Payments Including Interest Earned
IRS Code § 104(a)(2) stipulates that periodic payments in the form of
a structured settlement annuity are 100% free from federal, state,
and local income tax—including any interest earned on the annuity. While the
proceeds of a cash settlement are tax-free, the interest earned on money
invested from the settlement could be taxable.
2.
No Ongoing Fees or Expenses
Unlike most investment vehicles, structured
settlements contain no yearly management fees or cost to the claimant once the
money is invested.
3.
Guaranteed Rate of Return
When a structured settlement is placed, the
rate of return is guaranteed for the life of the annuity. The structured
settlement can then grow without any regard to the volatility of the market.
Additionally, when coupled with its tax-free status and lack of ongoing fees or
expenses, a structured settlement often outperforms investment
options offered within the equity market.
4.
Flexibility of Design
Payments can be made on a monthly,
quarterly, semi-annual or annual basis, or in the form of a lump sum. The
flexibility makes it possible to customize the structured settlement to
supplement monthly income, to pay for expenses such as college or retirement,
or to use for a large purchase, such as a house.
5.
Safety
Structured settlements
are some of the safest investments in the market. Reputable settlement
planning firms will only place structured settlements with life insurance
companies that have an A-rating or better, providing a guaranteed future income
source.
