Annuities
Certain annuities
A certain annuity makes defined future payments on fixed dates, for a fixed period. The amounts are set at settlement and guaranteed by the issuing life insurance company.
Compared with investing
Returns after tax and fees
For qualified personal injury cases, payments from a structured settlement annuity are tax-free, and there are no money management fees. A bond portfolio bought with a cash settlement pays both: its interest is taxed every year, and a manager typically charges a fee on top.
Once tax and fees are taken out, the net return on a comparable fixed income investment is usually well below the tax-free return on an annuity from a top-rated life insurer. We prepare a side-by-side comparison using current Treasury, municipal and corporate bond rates for each case.
Interest rates
Waiting for rates to rise rarely pays
Some claimants, and occasionally their attorneys, hope interest rates will rise after settlement so they can earn more than the annuity offers. In all our years in the business, the fixed income markets have never swung far enough for that strategy to succeed.
Claimants who made that choice 5, 10, 15 or 20 years ago are still waiting, and have given up a great deal of money. In many cases the settlement funds have since been spent.
Talk with our brokers about your case
No pressure and no jargon. A short conversation is often the clearest way to see your options.