Annuities
Although there are infinite payment options from a structured settlement annuity, for purposes of comparing them with investment alternatives, there are two major types:
CERTAIN ANNUITIES
These are annuities that make one or more defined future payments. Such annuities might provide a limited number of lump sum payments — for example, four annual amounts for college and two additional payments at ages 25 and 30. Alternatively, the annuity might provide a series of monthly payments, such as 20 years of monthly payments.
LIFE ANNUITIES
These annuities add a powerful insurance feature by providing payments for life. The security of lifetime (or life-long) income is a valuable benefit. It is more difficult to value precisely in comparison to investment alternatives that cannot provide life-time benefits.
