This week, the Federal Reserve decided not to raise short-term interest rates, but forecasters are expecting the Fed to boost rates two more times this year after already raising rates by 0.25 percent in December (only the second rate increase in a decade). Plaintiffs considering a structured settlement may be concerned they may miss out on higher returns on their settlement funds if they lock in structured annuity payments now at today’s lower rates.
Fortunately, there are solutions. Current annuities can be structured so that payments increase over time to account for inflation–typically at a fixed increase of two to three percent annually for the life of the annuity.
Another option is through PacificLife’s Index-Linked Annuity Payment Adjustment (ILAPA) rider, which follows the annual movement of the S&P 500 Index. Annuity payments increase when the index rises–up to a maximum of 5 percent. ILAPA annuity payments are never adjusted downward if the S&P 500 declines.
Each option provides its own unique features. While structured settlements give injured plaintiffs guaranteed income for 10, 20, 30 years or more, it is up to the plaintiffs legal counsel and structured settlement broker to design an annuity payment plan that will be sufficient for a secure financial future.
Please call me with any questions.