You may be a person who always obeys the law and have not gone in your whole life time to either a law agency or lawyer. But nobody has an inkling of fate’s plans and chances are that your neighbor might have suffered a personal injury and as a humanitarian, you try to help him through the rough patches of time. You help his family in filing a law suit against the persons responsible for the accident, and the court rules the case in your neighbor’s favor. The defendant’s attorney after evaluating the pros and cons of your neighbor family problems suggest structured settlement annuity as the best way of making payments.

An annuity is best defined as a string/set of payments given at specific intervals of time. The best examples of annuities can be referred to be as consistent deposits in monthly insurance payments, pension payment, savings account etc. They are usually categorized according to the number of payments made in a particular period of time (it may be weekly, quarterly, monthly, yearly etc).

structured settlement annuity

Structured Settlement Annuity is best described as a series of payments that will be given to a person in case of personal injury cases, or worker compensation or legal settlements (any type). If you are eligible for compensation, you are also entitled to receive your amount as a whole provided you are assisted by specialized consultants and have a worthy reason. These settlements are widely preferred as they are considered as safe bets for physical injury. Till the recent day from 1983, persons benefitted from these tax free income payments number more than 500,000.

In a structure annuity settlement, any injured worker is liable to receive compensation to the full amount and if he/she gets well, they can resume their jobs.

Periodic Payment Settlement Act or PPSA was formulated by the Government to help claimants save money for a better future.

Types of Structured Settlement Annuity

Personal Injury

The plaintiff has received a large amount as compensation or he/she opts for a huge settlement, but the amount is divided into small sums of payment that can be credited into his/her bank account or any other source over a period of time. These small payments can resolve help the backlog pay expenses of family requirements or medical expenses. The negotiations can be discussed in the presence of a structured settlement consultant who can provide the necessary numbers on calculation. The defendant can then transfer the agreement to a life insurance company (third party) which can provide the funds as per the plan.

Generally, the defendant’s insurance company prefers this type of payment – the reason- they can make the claimant settle for less money rather than the total value concerned with the case. But they do not disclose the price that will be needed for purchasing the annuity. The plaintiff’s lawyer cannot come to a conclusion if the amount is not brought to the fore for successful evaluation of settlement.

Wrongful Death

If the primary bread earner of a family has expired, his/her families are entitled to receive compensation via a preferred set of payments (tax free).

Worker’s Compensation

If you are injured while on the job, you will be paid until recovery if you have successfully fulfilled all the criteria. The amount can come in handy for medical expenses, handle family challenges such as paying your children’s school fees or other household requirements.

In the period of two decades, the structured settlement annuity has gone through changes. All States in US have approved the rules to minimize the risk of insurance companies in case of insolvency. They have to abide by a strict set of rules such as strict accounting rules, mandatory yearly audits, investments should meet specific standards with regards to security etc.


Families, who have lost one of their own, stand to benefit from the agreement if they have been appointed as beneficiaries and the payment they receive is tax free.

The frequency of payments can be adjusted according to the requirement. You can either opt for starting at the earliest or defer the duration as per your need.

The best advantage of SSA is that it does not have ups and downs similar to share markets, mutual funds and bonds. The same amount will be provided to you regardless of the fluctuations in economy. The Insurance Company you have opted for stands as guarantee for the annuity issued.

The interest added on the principal amount is exempted from every tax in Federal, local and State laws.

The payments may come in intervals, but they are consistent, secure and offer long term. The duration can give the claimant’s family to recover from the trauma and provide ample time to think of best investment proposals. The families are prevented from financial loss due to lack of knowledge in finance.

There are many individuals who have become disabled in accidents, with no option to go for work and they have to rely on Government grants if they have invested poorly and lost a major portion of their income.

Usually, the payments are managed by a professional specializing in finance and court cases. The payments may be adjusted to suit the claimant’s needs. Initial payment can be started with a partial huge amount.


Although they have proved their worth in various cases, but you cannot renegotiate (cannot borrow, defer, accelerate or change) the terms and conditions once you have opted for a particular variety in case of changes in financial conditions. Some claimants sell annuity payments for a large amount before receiving the first payment.

You cannot get the funds at your time-of-need in case of adverse circumstances.