Not all structured settlements begin and end with a life insurance annuity. A number of investment options are available when creating a structured settlement to meet an injured party’s financial needs.
A typical structured settlement involves purchasing an annuity by the defendant from a highly rated life insurance company. The payments from the annuity are then distributed to the injured party based on a guaranteed, fixed annuity contract issued by the life insurer. State and federal solvency standards and regulations keep insurers from investing heavily in risky investments. Investments are typically high-quality investment-grade fixed corporate securities. Injured parties, however, may feel more comfortable placing a portion of their settlement in investment vehicles outside an insurance company.
U.S. Treasuries Are An Option
U.S. Treasury obligations such as T-bills are the solution for those injured parties looking to diversify their structured settlement portfolio while still receiving the same safety and double-tax-free advantages of an insurance-based annuity. T-bills typically have lower rates of return than an insurance annuity, do not compound and have no lifetime guarantee (since they have specific maturity dates). Still, they should be considered as part of a balanced settlement for your injured clients.
Structures can include both an annuity and U.S. Treasuries. For example, a structure is created for an injured plaintiff who will receive $3,000 a month for 10 years. He can decide to receive $2,000 a month from a traditional life-insurance annuity and $1,000 a month from T-bill yields. U.S. Treasuries are also a diversification option when structuring attorney fees.
Regardless of whether the settlement is through a life insurance annuity or T-bill investment, personal injury clients have the peace of mind of knowing that the underlying assets enabling them to receive compensation from their injury are sheltered. Attorneys can confidently assure clients that these assets will continue to produce regular returns designed to meet immediate and long-term needs.