The Federal Reserve announced January 25 that it would keep its benchmark interest rate near zero until late 2014.

Here’s a link to the Bloomberg article on the decision.

The Fed cited the still weak economy as the reason for keeping rates at current levels for another 18 months. It also left open the possibility that rates will remain near zero even longer.

For injured parties who must decide how to receive a settlement payout, the Fed’s announcement makes their decision even more critical.

Lump Sum Option – New Concerns: Injured parties who invest their lump sum payment into safe and secure investments such as Treasury securities and investment-grade bonds will see near zero returns for the foreseeable future. This means injured parties might be forced to use more of their settlement than they expected to pay for medical and family expenses or they may be tempted to invest in riskier investments in an attempt to obtain higher yields.

Structured Settlement Option – Stability In An Unstable Economic Environment: Structured payouts are fully tax-free and injured parties receive guaranteed payments as specified in the settlement agreement. Injured parties do not need to worry about interest rate stagnation or market volatility. Their payments are guaranteed and secure.

I thought you’d be interested in the comparisons between the two options. Of course, injured parties can also opt to do a balanced settlement with cash upfront while structuring the remaining portion.

Feel free to email me with any structured settlement questions at pat@patrickfarber.com or call 800-734-3910.

Recent Posts

Newsletter Sign-up