A structured settlement is a financial or insurance arrangement that a claimant accepts to resolve a personal injury tort claim or to compromise a statutory periodic payment obligation. Structured settlements were designed as an alternative to lump sum settlements, and are now part of the statutory tort law of several countries. Structured settlements / payments are often referred to as “periodic payments.”
In the United States, there are structured settlement laws and regulations at both the federal and state levels. Federal laws refer to sections of the Internal Revenue Code. At the state level, the laws include structured settlement protection statutes and periodic payment of judgment statutes.
Medicaid and Medicare laws and regulations affect structured settlements. To preserve a claimant’s Medicare and Medicaid benefits, the structured settlement payments may be incorporated into “Medicare Set Aside Arrangements” and “ Special Needs Trusts.”
Legal Structure
In general, a structured settlement scenario is as follows: The injured party (claimant) settles a tort suit with the defendant (or its insurance carrier) pursuant to a settlement agreement that provides a series of periodic payments in exchange for the claimant’s securing the dismissal of the lawsuit. The payments
Unassigned case: The insurer retains the periodic obligation and funds it by purchasing an annuity from a life insurance company, which offsets its obligation with a matching asset. The payment stream purchased under the annuity exactly matches the periodic payments agreed to in the settlement arrangement. The insurer owns the annuity and names the claimant as the payee under the annuity, and directs the annuity issuer to send payments to the claimant. The periodic payments may be life-contingent (obligation to make a payment is contingent on someone’s life), the claimant (or the person whose life is measured) is named as the annuitant.
Assigned case: In assigned cases, the property/casualty insurance company does not want to retain the long-term periodic payment on its books, so the insurer transfers the obligation through a qualified assignment to a third party. The third party (assignment company) will require the property/ casualty company to pay an amount sufficient so that it may purchase an annuity to fund its newly accepted periodic payment obligation. If the claimant consents to the transfer of the periodic payment obligation in the settlement agreement or in a special form of a qualified assignment, the defendant and/or its property/casualty company has no further obligation to make the periodic payments. This means that the property/casualty company no longer retains the periodic payment obligation on their books. A typical assignment company is an affiliate of the life insurance company from which the annuity is purchased.
A “qualified” assignment must meet the criteria set forth in Internal Revenue Code Section 130 [3]. The qualification of the assignment is important to assignment companies because in its absence, the amount they receive to accept periodic payment obligations would be considered for federal income tax purposes. Under Section 130, the amount received is not included in the income of the assignment company. Without this provision, assignment companies would owe federal income taxes on assigned cases, and would have no resources from which to make the payments.
ANNUITY PAYMENTS
Your annuity payments may have proved beneficial when you began receiving them, but your circumstances are different 
Rapid Settlements will help to ensure that the sale of your annuity is the right decision for you. Our experienced professionals are here to assist you with a free quote, help to discover your options and help you find a suitable solution when selling your periodic payments.
What are my options?
Full Purchase
Rapid Settlements can purchase your settlement or annuity in its entirety. In this instance, you will receive a lump-sum payment from us, and will not receive any future payments from the settlement or annuity.
Partial Purchase
Rapid Settlements can purchase your immediate settlement or annuity payments for any period of time that you specify. At the end of that time, you would start receiving the remaining future payments again under the annuity. Perhaps you do not need the payments now and are concerned that you may need them in the future. We can buy the payments for the next five years, while you retain all rights to receive the future payments after year five.
Reverse Partial
Rapid Settlements can purchase your future settlement or annuity payments, while you continue to receive the current payments for a specified period of time. Perhaps you are receiving $2,000 per month for the next 20 years. You need the payments now, but want to sell a portion of the settlement. We can buy payments from years five through ten. You will continue to receive payments for the next five years, and then receive the payments again following year ten.
Split-Disbursement Partial
Rapid Settlements can split your settlement or annuity payments. Perhaps you are currently receiving $2,000 per month, but only need $1,000 a month. (We can give you a lump-sum payment for the portion of the payments you do not need in the future, while you still receive the balance of the settlement or annuity payments that you need now.)
Multiple-Stage Payout
Rapid Settlements can purchase your settlement or annuity with multiple lump payments. This might be an advantage if you want to switch from your current monthly settlement payments to annual lump-sum payments.
Multiple-Cash Flow
Rapid Settlements can purchase the cash flow if you want to sell future payments from more than one settlement or annuity.
Why wait?
We are confident of our abilities to successfully cash out all or part of your future payments. Our expertise and creativity in this area let us find solutions – even where others have failed – all at NO COST to you.
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