assignment company structured settlement

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After a settlement is reached and reduced to writing in a settlement agreement, the defendant can “assign” its obligation to pay any future payments to the plaintiff. This assignment is made to an entity called an assignment company to meet its obligations.

During the assignment process, the defendant must transfer the applicable settlement monies to the assignment company, after which both parties must sign a Uniform Qualified Assignment contract.

Understanding Qualified Assignments

An assignment is considered a “qualified assignment” if the settlement proceeds are excluded from income taxes under IRC §104a(2). To be excluded, the proceeds must be for compensatory damages from a case involving physical injury or illness.

IRC§130(c) states that payments can be made in the form of future periodic payments as long as:

• Cash flows are fixed and determinable
• Cash flows cannot be accelerated, deferred, increased, or decreased

Upon assignment of the obligation from the defendant to the assignment company, the defendant is released from further liability and administrative duties.

The Benefits of Qualified Assignments

From the plaintiff’s perspective, an assignment to a financially secure insurance company gives them the assurance that future payments will be made as promised . For many plaintiffs, this assignment to the life company alleviates the stress of future contact with the defendant, their insurer, or any party responsible for the injury.

From the defendant and/or their insurer, an assignment relieves the defendant of further compensation and responsibility. The defendant and/or their insurer are able to write just one check to the assignment company for the defendant’s liability, take the corresponding tax deduction, and transfer administrative duties and payment responsibilities to a third party (the life company and their assignee).

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What is our Tax-Advantaged Settlement Solution?

Our solution, the Non-Qualified Assignment (NQA), is designed to help claimants keep more of their settlement by receiving the income in multiple payments and deferring their taxes over time. This solution is for cases that fall outside of personal physical injury claims and litigation as defined under IRC Section 104(a)(2) and are not eligible for an IRC Section 130 qualified assignment. Our NQA is the first product of its kind to use a U.S. based assignment company, and is provided by Metropolitan Tower Life Insurance Company (MTL), a wholly-owned operating subsidiary of MetLife, Inc. 1

Why Attorneys Recommend Structured Settlements

The vast majority (96%) of employment plaintiff attorneys who are familiar with structured settlements recommend them to their clients. 2 Our 2023 poll highlighted some of the key reasons why attorneys recommend structured settlements to claimants.

Provides claimants with guaranteed, tax-efficient payments

Allows claimants to receive some immediate cash

Ensures claimants won’t deplete their settlement too fast

Increases value of the settlement

Video Gallery

What is a Non-Qualified Assignment?

Bejan Shirvani and Benita Adenuga (Nwaozor) of MetLife's Structured Settlements team discuss what a Non-Qualified Assignment is and the potential advantages for a claimant and defendant.

Featured Insights

MetLife's 2023 Structured Settlements Poll surveyed employment plaintiff attorneys to better understand their familiarity with structured settlements for wrongful termination, discrimination, harassment and other employment matters.

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When you partner with us, you are choosing a leader who will be with you every step of the way and can provide claimants with a steady and reliable income stream — both now and in the future.

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Structured Settlement Annuity FAQs

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Structured Settlement Annuities Common Questions

What is a structured settlement.

Structured settlements are a tax-advantaged method of compensating injury victims. Encouraged by the U.S. Congress since 1982, a structured settlement is a voluntary agreement between the injury victim and the defendant for future periodic payments.

With a structured settlement annuity, the injured claimant doesn’t receive compensation for his or her injuries in one lump sum. Rather, the claimant receives a stream of tax-free payments tailored to meet future medical expenses and basic living needs.

A structured settlement may be agreed to privately (for example, in a pre-trial settlement) or it may be required by a court order, which often happens in judgments involving minors.

What kind of flexibility is associated with a structured settlement annuity?

Structured settlement annuities are exceptionally flexible and can be designed to meet virtually any set of needs. A relatively simple payment schedule can be set up that provides for equal payments at set intervals – for example, every month for 20 years.

However, payments need not be made in equal amounts. A claimant who will need a new wheelchair every three years might elect to receive a larger payment every 36 months to help defray the cost. (This would presumably be in addition to the regular payments.)

The inherent flexibility of structured settlement annuities means that they are well-suited to compensate claimants for a wide variety of injuries.

Who determines the amount of Structured Settlement payments and the schedule?

In any physical injury case, the claimant and defendant negotiate matters such as the cost of the injured party’s medical care, basic living, and family needs. Oftentimes, one side (or both) engages an expert, such as a settlement consultant, who provides calculations on the long-term cost of these needs.

Once there is agreement on the total damages, the injured claimant can select a periodic payment plan that meets his or her needs. The defendant must then agree to make future payments via a structured settlement annuity. The defendant assigns the payment obligation to a third-party assignment company, who funds the obligation to make periodic payments through a life insurance company annuity.

As these issues involve complex calculations, specific language for the settlement agreement, and the completion of the appropriate paperwork, the claimant should always consult with his/her attorney and settlement consultant.

Are structured settlement annuities more likely to be used in certain types of cases?

Structured settlement annuities can be ideally suited for many types of cases, including:

• Persons with temporary or permanent disabilities;
• Guardianship cases involving minors or legally incompetent adults;
• Workers’ compensation cases;
• Wrongful death cases with surviving spouses and/or children; and
• Severe injury cases, particularly those that involve long-term needs for medical care, living expenses, and familial financial support.

I’m involved in a lawsuit now. Why should I consider a structured settlement annuity?

The tax-free payments from a structured settlement annuity can:

• Relieve the financial pressures of medical expenses and living needs;
• Meet long-term rehabilitation or permanent care facility expenses;
• Provide for the future costs, such as college tuition, a down payment on a home or mortgage payments, or retirement;
• Provide enhanced protection of the recovery from creditors; and
• Provide long-term, tax-advantaged financial security.

What are the advantages of a structured settlement annuity over a lump-sum payment?

A structured settlement annuity has several advantages. First, there is security . A structured settlement annuity provides guaranteed* long-term income, giving the injured claimant the ability to recover without spending time and resources determining investment strategies. Regular payments can be tailored to fit the claimant’s specific needs.

A second advantage is financial . When Congress amended the federal tax code to encourage structured settlement annuities, it explicitly provided that 100% of every structured settlement payment received on account of physical injury or sickness within the meaning of IRC 104(a)(2) would be exempt from federal and state income taxes. While the proceeds from a lump sum injury settlement are income-tax free, if the proceeds are placed in a traditional investment, any interest earned may be taxable.

There are many other benefits as well. For instance, the claimant avoids the risk of mismanaging his or her settlement proceeds. Insurance industry statistics show that nearly 25-30% of all injured parties completely dissipate their judgments or settlements within two months of recovery, and 90% of them spend it all within five years. (Source: The Rutter Group, Ltd. from Flahavan, Rea, Kelly & Tener, “California Practice Guide: Personal Injury” (TRG 1992) Ch. 4.)

Finally, using a structured settlement annuity, an injured party can avoid the risk of outliving his or her recovery by transferring the risk to a reliable, experienced financial institution.

*Guarantees are subject to the claims-paying abilities of the issuing insurance company.

What are the disadvantages of a structured annuity?

There are two main disadvantages of a structured settlement annuity:

• The periodic payments cannot be borrowed against, deferred, accelerated or modified once they’ve been set up. That’s why it is vitally important for claimants to work with an experienced settlement consultant to determine the best individual strategy.
• Default risk, meaning the life insurance company that is selected becomes unable to make the payments. However, this risk is small due to the well-capitalized life insurance companies that are used for structured settlement annuities. Settlement proceeds can also be spread among several different life insurance companies to lessen default risk.

What are some of the federal tax rules that make structured settlement annuities beneficial?

In the Periodic Payment Settlement Act of 1982 (P.L. No. 97-473), Congress adopted tax rules to encourage the use of structured settlement annuities for resolving physical injury cases.

Section 104(a)(2) of the Internal Revenue Code clarifies that the full amount of the structured settlement annuity payments are tax-free to the injured party. By contrast, the investment earnings on a lump sum payment are usually fully taxable.

What is a “qualified assignment”?

The defendant or its insurer may transfer the obligation to make future payments through a “qualified assignment” to a financially secure and experienced institution – a life insurance company, for example.

This process relieves the defendant of further responsibility for the payments and transfers the administration and record-keeping responsibilities. The assignment company specializes in these activities and may offer additional financial security to the claimant.

What other federal tax rules govern the use of structured settlement annuities and qualified assignments?

Internal Revenue Code Section 130 specifies the requirements to establish a qualified assignment, which includes:

• The assignee assumes the liability from the defendant;
• Both the injured party (and his/her attorney) and the defendant agree that the payment schedule cannot be “accelerated, deferred, increased or decreased”;
• The payment stream may be excluded from the recipient’s gross income for tax purposes;
• The injury must be a physical sickness or injury; and
• A highly secure funding asset (such as an annuity or U.S. Government obligation) must be used to fund the payments.

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Attorneys now have the option to let their contingency fees be managed by their own personal financial advisor or an established and reputable financial institution that has been designated for the program.

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Structured Settlement Annuities in Your Area

Understanding structured settlements.

A structured settlement annuity (“structured settlement”) allows a claimant to receive all or a portion of a personal injury, wrongful death, or workers’ compensation settlement in a series of income tax-free periodic payments.

Structured settlements may also be used in non-physical injury settlements so that our clients may receive tax-deferred income instead of receiving an immediate and fully taxable lump sum settlement payment.

A Sage settlement consultant can advise you of your different structured settlement annuity options, which include:

• Fixed-Indexed Annuities
• Single Premium Immediate Annuities
• Deferred Income Annuities
• Multiple-Year Guarantee Agreements.

How Structured Settlements Function

The decision to utilize a structured settlement must be made before finalizing the settlement agreement. Once both parties have agreed to the details of the structured settlement, the claimant releases the defendant (or insurer) from liability.

The defendant or insurer then pays the structured settlement payout funds to a third-party assignment company, which assumes liability and purchases an annuity from a structured settlement carrier. The carrier then makes a series of periodic payments based on a previously agreed upon timeline and amount. For more information about structured settlement annuities or our settlement services , contact us today.

Structured settlement funding can be made with proceeds from settlements of almost any size; in fact, many structured settlement providers will structure amounts as low as $10,000. The choice is ultimately the claimant’s, and many find that a structured settlement is much more beneficial than a lump sum cash payment.

Key Advantages of Structured Settlements

• 100% income-tax-free for physical injury and wrongful death cases: Payments (including growth) for physical injury and wrongful death cases are free from state and federal income tax under Section 104(a) of the Internal Revenue Code.
• 100% income tax-deferred for non-physical injury cases: Payments (including growth) for non-physical injury cases are tax-deferred.
• Guaranteed payments 1 : The parties agree to the payment schedule at the beginning of the transaction. That results in a steady source of safe, reliable income for the claimant.
• Guaranteed rate of return: Structured settlement payments have a locked-in rate of return. That protects injured claimants against market volatility.
• No overhead fees or expenses: Structured settlement have no overhead fees and preferential tax treatment. That allows them to remain competitive with traditional investments.

Explore Market-Based Structured Settlements

There are more investment options for claimants aside from structured settlement annuity. To learn more, visit our Market-Based Structured Settlements page .

Watch our video to learn more about diversifying your settlement funds.

For more information about structured settlement annuities, contact us today.

1 Guarantees are subject to the claims-paying abilities of the issuing insurance company.

Further Reading on Structured Settlements:

• Is Annuity Income Taxable?
• Are Annuities Insured? Examining the Financial Strength of Structured Settlement Annuity Providers
• How Structured Settlements Can Help Divorcing Spouses
• Tax-Free Income with Competitive Returns: Why Your Clients Need to Consider Structured Settlements
• Don't Fall for These 6 Structured Settlement Myths

See What clients Are Saying

“I highly recommend Lance and will use him again on other structured settlements.” “ I worked with Lance Harris for the first time in 2013. Lance and his assistant were fantastic. They made the [structured settlement] process very easy and provided me with all of the documentation I needed to get the petition for the minor's comp ” - Marcus J. Bradley, Marlin & Saltzman

“Simply said, I put my faith in Scott to do what is right for my clients.” “ I have worked with Scott Freeman since the days my firm opened the doors over a decade ago. I trust Scott to ensure my clients' needs are always met both now and into the future. The most impressive thing with Scott is that he finds a way to keep in tou ” - Kurt Arnold, Partner & Co-Founder, Arnold & Itkin LLP

“Jennifer, you certainly have made your case that it is vital for me to have you at mediation to get the numbers that are best for my client” “ You certainly have made your case that it is vital for me to have you at mediation to get the numbers that are best for my client. Thanks for all your hard work on this case. ” - Robert Molettiere, Moletteire & Torpy

“Need the BEST? Look no further than Susan Gleason!” “ Need the BEST? Look no further than Susan Gleason! She helped our family with an annuity settlement in a tremendous way! Her style, commitment, and interpersonal skills go unmatched!   ” - Paige W

“With Mitch Kobil's help, I put together a financial plan that provided my three children with an ample amount of money to subsidize their entire college educations.” “ From my perspective, structuring a portion of my fee out of the settlement proceeds of the case we worked together on several years ago was the smartest move I ever made. With Mitch Kobil's help, I put together a financial plan that provided my three ch ” - Attorney Richard M. Kenny

“They are ardent supporters of the plaintiff bar community, and we consider them an integral part of our team.” “ They are ardent supporters of the plaintiff bar community, and we consider them an integral part of our team. ” - Brian Panish, Panish, Shea & Boyle, LLP | Los Angeles, CA

“I would highly recommend Christina to anybody in need of an experienced settlement planner.” “ Christina is a caring, hard-working, and knowledgeable professional. She is meticulous about the details to protect my clients' futures. I would highly recommend her to anybody in need of an experienced settlement planner. ” - Mitchell Proner, Proner & Proner | New York City, NY

“I wouldn't utilize a structured settlement as part of any global settlement for my client without first consulting George.” “ Any time that I'm in need of a structured settlement proposal for one of my clients George Audi is my first call. George and his staff provide the needed information and settlement options in a prompt and professional manner. George is also a valuable s ” - Lawrence M. Kelly, Luxenberg Garbett Kelly & George | New Castle, PA

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Learn More About Managing a Lump Sum

Many injury victims find it very difficult to manage a lump sum settlement on their own. In fact ninety percent of injury victims have nothing left of their settlements within five years of settlement. Implementing a sound financial plan with the right combination of investments can prevent this from happening. However, most financial products have costs associated with them and even though a physical injury recovery is tax-free, once invested the gains are taxable. Nevertheless, there are many good options for managing your physical injury recovery and we can assist you developing a plan that is right for you. Certain financial products have less risk and can offer guarantees of principal to limit downside risk since you only get one opportunity to preserve your physical injury recovery. Our job is to give you sound advice about the options to let you make the best possible decision.

You may want to consider mutual funds, managed accounts, annuities, life insurance, college plans and long term care insurance. All of these products can be wrapped up inside trusts to protect you and your loved ones. It is important to explore the many options available and that is where we come in.

Why You Need a Settlement Planner

The intersection of settlement planning, settlement taxation, public benefit preservation and liens complicates settlements today. These matters are a fertile area for malpractice claims against personal injury attorneys. Without an expert’s guidance, keeping up to date on the changing facets of the law and ethical responsibilities in these areas is difficult at best. You should not underestimate the importance of hiring an expert settlement planner on your next case who can help guide you and your client through these complexities.

The use of structured settlements and trusts as a way to fund future needs for injury victims has become common place in today’s settlement landscape. Frequently, these solutions are proposed by the defendant as a way to settle the case.

Structured Settlements

A structured settlement is simply a future periodic payment arrangement that is made a part of a personal injury settlement. Under Section 104(a)(2) of the Internal Revenue Code, all of the future periodic payments are completely tax-free to the injury victim even though the payments include interest they earn. The structured settlement is spendthrift as it can’t be accelerated, invaded or sold. Fixed annuities are used as the funding mechanism for a structured settlement. These annuities are offered by large well capitalized life insurance companies. Annuities are used because of their flexibility and because many different payments options are available for the injury victim to meet their needs.

While the transaction and the concept might seem very simple, there are many issues that trial lawyers should be aware of as well as concerned about. If you review the sections in this part of the site it will give you a good idea of the issues and also why it is important to have your own settlement planner looking out for these issues.

Understanding the Transaction

In order to have a tax-free structured settlement in a personal injury settlement, a release with the required language for a structured settlement must be executed, a uniform qualified assignment must be executed and the structured settlement annuity must be funded by the defendant with a check made payable to the assignment company. The premium which goes from the defendant to the assignment company is used to purchase the qualified funding asset (the annuity contract) from the annuity issuer. The assignment company is the obligor (owes the payments to the injury victim) and the annuity issuer (the life insurance company) guarantees the payments. The release must set forth the obligation of the defendant to make the future periodic payments and then that obligation is assigned to the assignment company relieving the defendant of any future liability or obligation. The qualified assignment is the document that transfers the future periodic payment obligation from the defendant to the assignment company and is a required document in the transaction.

Qualified Settlement Funds

Qualified Settlement Funds grew out of Internal Revenue Code Section 468B. 468B was passed by Congress in 1986 and created Designated Settlement Funds (“DSF”). The DSF was fairly limited in the way it could be utilized and in 1994 passed regulations creating a new type of fund, Qualified Settlement Funds (“QSF”). The DSF and QSF were created for use in mass tort litigation enabling a defendant to settle a claim by depositing money into a central fund that could then settle with each individual plaintiff. The defendant could walk away from the fund after its creation and funding taking a deduction for the entire settlement amount in the year it was deposited into the fund. However, the QSF is not limited to situations involving mass torts. A Qualified Settlement Fund can be used to settle cases of any value involving multiple plaintiffs including cases involving the personal injury victim with a derivatively injured spouse, child or parent. It can arguably be used in single plaintiff cases based upon the plain language of the Treasury Regulations.

Using a 468B Qualified Settlement Fund settlement proceeds can be placed into a QSF trust preserving the right to do a structured settlement and protecting public benefit eligibility temporarily. While the money is in the QSF, a financial settlement plan can be designed and liens can be negotiated. Additionally, if the settlement recipient is on public benefits the QSF avoids issues with constructive receipt of the settlement, which could trigger a loss of public benefits. While the funds are in the QSF, there is time to create a public benefit preservation trusts for the settlement recipient. The structured settlement or other financial products can then be set up to work in concert with a special needs trust or Medicare Set Aside so that the injured victim does not lose their public benefits.

IRS Code § 468B and Income Tax Regulations found at § 1.468B control the use of a QSF. These provisions provide that a defendant can make a qualifying payment to the QSF and economic performance would be accomplished, crucial for tax reasons to the defendant. Thus the QSF trustee can receive settlement proceeds allowing the defendant a current year deduction releasing them from the case. The QSF trustee can, after receiving the settlement proceeds, agree to pay a plaintiff future periodic payments, assign that obligation to a third party, and allow the plaintiff to receive tax-free payments under IRC § 104(a)(2) (the provision excluding from gross income periodic payments from a structure). The transaction works exactly the same as it normally would when you have the defendant involved in the structured settlement transaction.

There are only three requirements under 468B to establish a QSF trust. First, the fund must be established pursuant to an order of a court and is subject to the continuing jurisdiction of the court. Second, it must be established to resolve one or more contested claims arising out of a tort. Third, the fund, account, or trust must be a trust under applicable state law. One restriction is that it can’t be used in a Workers’ Compensation case.

Mechanically, it is easy to establish a QSF. First, the court having jurisdiction over the litigation must be petitioned to establish the fund. The court is provided with the fund document and an order to establish the fund. Once the order is signed, the defendant is instructed to make a check payable to the QSF and the defendant is given a cash release in return for the payment. The QSF then can fund a structured settlement, pay liens and fund a special needs trust. Once all funds have been distributed, the fund dissolves.

There are several advantages to utilizing a QSF. First, funding the QSF removes the defendant and defense counsel from the settlement process. It is very much like an all cash settlement in the eyes of the defendant. Once the Trustee receives the settlement money, economic performance has occurred and the defendant is out of the case. Second, the attorney’s fees and other expenses can be paid immediately from the 468B fund. Third, the 468B trust removes the defendant from process of allocating the settlement amounts between the various plaintiffs. Fourth, the plaintiffs receive the interest income from the settlement fund. The plaintiffs can take their time, carefully considering the various financial decisions they must make and addressing public benefit preservation issues. Finally and probably most importantly, the time crunch is alleviated with regards to the lien negotiations, allocations, and probate proceedings.

The end of a personal injury case is typically one big time crunch which I call the “settlement time crunch”. There is enormous pressure to wrap up the case quickly to get the client paid and yourself paid. However, in the rush to finalize the settlement you may overlook or miss important settlement planning issues. Instead, a Qualified Settlement Fund can be created to receive the settlement proceeds thereby giving everyone the time necessary to carefully plan for the future. You can get your fees and costs quickly. The funds are obtained from the defendant, they are released and the client’s settlement dollars can begin to earn interest for them. The liens can be negotiated, allocation decisions can be made, public benefit preservation trusts can be implemented and structured settlements can be considered. Your option to structure your attorney fees is also preserved. The QSF is an important tool for trial lawyers to consider using.

Reducing Default Risk

The only major risk an injury victim takes when entering into a structured settlement is the solvency of the company selected to provide the future periodic payments. However, this is a relatively small risk given the financial size of the major life insurance companies that provide structured settlement annuities. Nevertheless, when a “substantial” structured settlement is done one must always consider split funding the structured settlement with multiple companies to spread out the risk. The premium can be spread out amongst as many different companies as the client would like. However, if the case involves a rated age it may be detrimental to the client to split fund. This issue must be examined on a case by case basis.

In addition, when a structured settlement is done secured creditor status can be requested. This is accomplished by doing a special kind of assignment document called a Uniform Qualified Assignment Release and Pledge Agreement. This gives the injury victim secured creditor status which means in the event of the insolvency of a life insurance company they would stand in line only behind the government as a creditor. It moves them to the front of the line.

Substandard Age Ratings

You may have heard of “Substandard Age Ratings” or “Rated Ages” if you have had a case where the plaintiff had a reduced life expectancy and a structured settlement was offered to settle the claim. A “rated age” is a life expectancy adjusted age used to calculate the cost of a structured settlement. If a person receives a rated age it means that the life insurance company has decided that the person’s life expectancy is less than normal. The shortened life expectancy results in a lower structured settlement cost for the same benefit stream when compared to the cost for a person with a normal life expectancy. For example, a case we consulted on involved a two year old brain injured girl who had a rated age of sixty-four. Therefore, a life annuity, the most common funding vehicle for a structured settlement, is priced as if the plaintiff is chronologically age sixty-four. This results in a significant cost savings on the price of the life annuity.

A structured settlement consultant obtains rated ages by sending the plaintiff’s medical records to the life insurance companies that are in the structured settlement market. Usually, a consultant will send out at the most fifteen to twenty pages of records indicating any pertinent diagnosis and current medical conditions. A life company physician or medical underwriter determines the rated age after reviewing the records provided to them. I have heard many times from attorneys that none of the plaintiff’s physicians say she has a reduced life expectancy so don’t bother getting rated ages. Just because a doctor does not comment on reduced life expectancy or states there is no reduced life expectancy, does not mean there will be no rated age. While what the doctors say carries weight, the ultimate decision on whether to issue a rated age rests with the life insurance company. In most cases, the life insurance company will issue a rated age if certain medical conditions are present.

Physicians’ and Medical Underwriters’ rated age assessments can vary greatly among life insurance companies since they are based upon an examiner’s opinion and opinions among examiners will differ. For example, in the case mentioned above involving the two year old brain injured girl, we obtained rated ages with the highest being sixty-four and the lowest being twelve. The fifty-two year difference in the rated age makes a tremendous difference in the ultimate benefits to the victim. Even the thirteen year difference between the highest rated age of sixty-four and the second highest rated age of fifty-one makes a significant difference. In the case involving the brain injured minor, Pacific Life had the highest rated age and New York Life had the second highest rated age. A.M. Best rates both Pacific Life and New York Life A++ so they were both highly rated life insurance companies. The structured settlement consultant working for the defendant was not approved to represent Pacific Life. If we had not been involved in the case the defense consultant would have quoted New York Life and would not have gotten a rated age from Pacific Life. If the victim did not know about Pacific Life she would have lost a substantial amount of money.

How much would she have lost? If the rated age of fifty-one is used the plaintiff has lost $514,938 over the guarantee period and $2,439,987 over the expected period. As you can see even a relatively small variation in rated ages, such as thirteen years, can have a profound impact on a case. To add another layer of complexity, you must then compare all of the rated ages with each particular life insurance company’s rates to determine the best possible deal. It is very important that you have all of the facts when a rated age is involved.

Annuity Rates

The two main determinants of the price of a structured settlement annuity are rated ages and annuity rates (pricing). To figure out the best possible solution using a structured settlement you must compare the rated ages with the annuity rates. Annuity rates vary depending on how aggressively a life insurance company is going after business and on market conditions. Most life insurance companies offer what is called daily rates (special pricing) if the premium is $250,000.00 or more.

As an example, take the case of Ed. His highest rated age was from Allstate at fifty-three and $1,000 per month for life with a twenty year guarantee had a cost of $183,812. The second highest rated age at 38 was from Prudential and the same benefits had a cost of $202,374. Mass Mutual had the third highest at 35 and the same benefits had a cost of $212,358. Interestingly though the fourth best price was from Met which had one of the lowest age ratings at 14 but a cost of $216,314 which was lower than quite a few companies that had better age ratings. In some cases the highest age rating may not yield the lowest price as it normally does thus a complete market survey must be done to get the best possible deal for the injury victim.

Explanation of State Insurance Guaranty Associations

Understand first, that though state guaranty fund laws are based on an original model act, over the years, each act has been modified such that they are all somewhat different. At its core, each state has a guaranty association composed of all of the companies who write life and health insurance in that state. If any carrier becomes insolvent, the guaranty association assesses its members against a predetermined formula to make up the shortfall. The variables in each state include:

• The coverage limit: Most states use a $100,000 limit though some offer $300,000 or $500,000 for annuities, including structured settlement annuities (Florida’s is $300,000 – see attached statute). The limit refers to the present value of the remaining future stream of payments at the time of the insolvency.
• The triggering mechanism: Most states trigger the coverage with insolvency. Some few use a somewhat lower standard.
• Definition of who is covered: Most states cover the annuity owner, in the case of a structured settlement, the assignment company. Some states cover the annuitant or the measuring life.

In practical terms, the guaranty associations fund the transfer of obligation from an insolvent insurer to a solvent insurer. The classic case was the Canadian company, Confederation Life. When Confederation was taken into conservation by the Canadian government, the US regulators separated the US business from the parent company. Each block of business was grouped and assigned a pro rata share of the assets. The block of assets and liabilities in each line of business was then sold at auction to the highest bidder (which is to say, the company willing to take the least assets in order to guaranty 100% payments to all policyholders in that line of business. The prize business, life insurance and investment products, is sold first. Since those contracts represent an ongoing stream of premiums or payments, companies are willing to take less assets in order to secure the business. The excess assets are then poured over the other lines of business. The single premium business is sold last, by which time it is covered by the maximum amount of assets. If there is any shortfall, the guaranty funds step in to fill the gap. It is relatively rare for guaranty funds to have to do more than finance the process and recoup their investment once all policyholders have been guaranteed 100% payments. In the case of the kind of highly rated companies associated with structured settlements it is rarer still.

Only once in the history of the guaranty funds has a shortfall continued to exist at the end of the above process. That was the case of Executive Life of California which fell victim to the junk bond craze of the mid-1980′s. First Executive Corp, ELIC’s parent was holding some 13,000 structured settlements when it was taken into conservation. Of those, 8,000 were covered 100% by ELIC’s assets. Of the remaining 5,000, 3,500 were covered by a combination of ELIC’s assets and the guaranty fund coverage. Another 1,100 policies were made whole by a combination of the above and shortfall payments made by property casualty insurers. The remaining 300 annuitants recovered an average of 92 cents on the dollar.

That is the only case in which anybody suffered any loss with a structure. Given that there are more than 500,000 structures in force around the world, an 8% on 300 policies is an infinitesimally small loss ratio. Moreover, with the improvements in state regulation systems, including risk-based capital measures, far fewer insolvencies are expected to occur, and fewer still, if any, among the companies who write structures who represent the top 2% of all life and annuity companies in the country.

Havelet Assignment Company

Settlement
Solutions for a 
Secure Tomorrow

We specialize in providing strategic solutions for those navigating the financial implications of legal settlements and high-value sales.

Partner With Us to Transform Your Settlement into a Powerful Tool for Your Future.

We are dedicated to empowering our clients’ futures through structured settlements, attorney fee deferral plans, and structured installment sales. Our mission is to provide comprehensive financial solutions tailored to meet the unique needs of attorneys, claimants, and sellers alike.

Our Strategies

We’ve developed a suite of strategic solutions tailored to meet the specific needs of our diverse clientele. From attorneys looking to defer fees for tax advantages to claimants seeking structured settlement plans for long-term security, and sellers aiming for tax-efficient installment sales, our specialized plans are designed to maximize your financial outcomes.

Attorney Fee Deferral Plan

Designed for legal professionals seeking to optimize their financial planning and tax management. By deferring fees, attorneys can spread their income over several years, aligning their cash flow with personal and professional goals.

Settlement Claimant Plan

Focused on individual awarded settlements. Unlike lump-sum payments, structured settlements offer a series of tax-free payments, ensuring financial stability over time.

Structured Installment Sales

For those looking to sell property or businesses, Structured Installment Sales offer a strategic alternative to traditional lump-sum sales. This approach provides a steady stream of income over time, potentially reducing tax burdens and allowing for investment growth. Special considerations available for agricultural related transactions.

The Havelet Team

Established backgrounds in insurance, legal, and asset management relating to structured settlements.

Gobind Sahney

Jason Sutherland

Structured Settlements & Assignment Companies: A Seamless Process

An assignment company must be involved when a claimant or a plaintiff attorney wants to utilize a structured settlement..

United States tax laws declare that settlement funds to be structured cannot be “constructively received,” meaning the defendant cannot pay the attorney, law firm, or claimant directly. Instead, the defendant issues the funds to an independent, third-party assignment company. The assignment company is directed to purchase the structured settlement. The structured settlement provider then makes the agreed-upon payments to the claimant or attorney.

Rather than using an annuity as the underlying investment, a market-based structured settlement uses an investment portfolio managed by a reputable financial institution. Alternatively, the claimant or attorney can choose to have their own financial advisor manage the portfolio. Depending on the type of settlement, the structured settlement payments will be income tax-free or income tax-deferred.

The Structured Settlement Process 

Why is United Assignments based in Barbados?

The United States has a favorable tax treaty with Barbados that prevents double taxation on specific funding instruments, including structured settlements. Upon receipt of the funds from the defendant, United Assignments immediately wires the money to a United States-domiciled financial institution. All funds remain in the United States for the entirety of the market-based structured settlement contract.

United Assignments is subject to strict Barbadian legal and regulatory authority and holds a local Barbados Tax ID and a United States Tax ID Number. The company is overseen by an experienced Board of Directors and Management team.

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