Structured Settlements Utilize Annuities
To fund the financial obligations owed to an injured party, a defendant – or more usually, his or her casualty insurance carrier – will purchase one or more annuities from a life insurance company, or delegate its periodic payment obligations to a third party, which in turn would purchase a qualified funding asset – either an annuity or a government bond.
The payments are then structured, or scheduled. An insurance company agrees to pay the injured individual a predetermined amount of cash for a fixed length of time or for the duration of the life of the claimant, depending upon the particulars of the settlement agreement.
Structured settlements are governed by both federal and state laws and must be closed under court order. The process is highly regulated by the courts. Some states also require the hiring of an attorney as a precondition to acquiring a structured settlement annuity.
To fund the financial obligations owed to an injured party, a defendant – or more usually, his or her casualty insurance carrier – will purchase one or more annuities from a life insurance company, or delegate its periodic payment obligations to a third party, which in turn would purchase a qualified funding asset – either an annuity or a government bond.
The payments are then structured, or scheduled. An insurance company agrees to pay the injured individual a predetermined amount of cash for a fixed length of time or for the duration of the life of the claimant, depending upon the particulars of the settlement agreement.
Structured settlements are governed by both federal and state laws and must be closed under court order. The process is highly regulated by the courts. Some states also require the hiring of an attorney as a precondition to acquiring a structured settlement annuity.
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