The Role of Structured Settlement Brokers
The Role of Structured Settlement Brokers
Structured settlement brokers are an essential element in developing annuity payment plans. This type of arrangement is used to provide financial compensation to individuals who sustain serious injury caused by neglect of another, or to payout jackpot lottery winnings.
Structured settlement brokers play a vital role by advising attorneys about various annuity plans available to clients or by assisting clients with the sale of future annuity payments. Brokers assist in negotiations to obtain the best plan for clients and are available to answer questions related to offers made.
Every structured settlement is unique and can be established to suit current and future financial needs of Annuitants. Injury compensation amounts are based on numerous factors including Annuitants' life expectancy and future financial needs to ensure they maintain their standard of living and receive appropriate medical care.
Structured settlements can be arranged to provide lump sum cash to cover immediate medical expenses or legal fees. The balance is paid through annuity payments paid over a specific time period or for life.
Brokers develop proposals based on gathered assessments of Annuitants lifestyle and short- and long-term healthcare requirements. Brokers review Annuitants' credit, employment, and medical histories to analyze life care plans.
An important factor of developing structured settlements is age rating. Annuity payments are underwritten by life insurance companies. When insurance providers offer policies to customers, premiums are based on age ratings which include Preferred, Standard, and Substandard. Those with substandard ratings are usually declined coverage. However, this rating can work in favor of Annuitants.
Substandard ratings often provide a better rate-of-return because those who engage in lifestyles that garner substandard ratings usually have a reduced life expectancy. Factors include smoking, drinking alcohol, cancer, obesity, diabetes, heart disease, and chronic health issues such as multiple sclerosis.
Brokers can gather quotes from multiple life insurance companies to obtain the best plan for Annuitants. If necessary, brokers can consult with government entities that provide supplemental income to Annuitants, such as Supplemental Security Income (SSI), as to not interfere with benefits.
Structured settlement brokers can also provide tax and financial planning advice to Annuitants. Annuity payments provided as injury compensation are not subject to state or federal taxes, while annuities provided for lottery winnings may be subjected to taxes at both levels. When annuity payments are distributed to an estate they are subject to estate taxation.
Annuity payments can be established in any manner agreed upon by the parties involved. Annuitants can elect to receive payments monthly, quarterly, semi-annually, or annually. Payments can be of equal or varying amounts.
Structured settlements cannot be altered once finalized, so it is crucial to ensure they are setup exactly as needed. The exception to the rule is a few states allow Annuitants to sell future payments for lump sum cash.
Approximately two-thirds of U.S. states prohibit the sale or transfer of future annuities. Of the states which do allow the sale, Annuitants are often required to appear in court to provide evidence as to how the sale will enrich their life. Selling future annuities paid for lottery winnings is not as difficult as selling annuities for injury compensation.
When selling future annuity payments it is important to work with structured settlement brokers who are registered with the Department of Justice and insured against errors and omissions. The general public can download a list of registered brokers via the DOJ website at Justice.gov.
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