Search:

Would you like to contribute to this site? Annuity Menu Submit an Article Submit a Tip Place your Ad Add URL Annuity Questions? Contact Us  Annuity Types   Compare Annuities   Fixed Annuity   Immediate Annuity   Annuity Calculator   Annuity Quote   Purchasing Annuities   Selling Your Annuity   Annuity Payment   Annuity Equity Indexed   Annuity Products   Annuity Companies   Annuity Services   Annuity Taxes   Annuity Information   Annuities   Financial Planning   Retirement

Return To Annuity Article Archive   Search the Article Archives How does a structured settlement annuity work? By George Hostetler The process of arriving at a structured settlement is through negotiations concerning the value of the annuity and payment schedule. The process involves primarily a claimant and the life insurance company; if the structured settlement annuity is related to litigation, it will involve the defendant as well. As per the process, the defendant agrees as per a contractual agreement to pay the claimant sums of money on a periodic basis and in exchange the claimant drops his litigation. The defendant directs a third party/assignee to execute the annuities on its behalf and provides it with funds necessary to do so. An annuity contract is purchased by the assignee and is used for fulfilling the periodic payment obligations. Individuals who are in the process of obtaining a structured settlement annuity can avail the services of a broker who can help them with the best deal available with respect to their circumstances. Structured settlements are popular because of the benefits that they offer. These include a tax-free payment stream over a period of time and a guarantee of payment. Other investment alternatives such as stocks and real estate may offer better returns but do not provide the guarantee and security offered by structured settlements. These settlements are regulated by state and federal laws that need to be observed. These laws may require compulsory legal opinion in a structured settlement transaction. Structured settlement firms manage the paperwork of a structured settlement annuity. The documents include the Settlement Agreement and Release, court orders, assignment agreement, and the annuity contract. The defendant should ensure that he fulfills all conditions for the annuity to remain tax-free for the duration of the settlement. In order to protect the tax-free status of a structured settlement annuity, it is also important to ensure that once the structured settlement annuity has been agreed upon by the concerned parties, it should not be altered. The payments from a structured settlement can also be made to an estate, in such a case, they are free from income tax but estate tax is levied. The closing of a structured settlement can take three to six months. An individual starts receiving payments thirty to forty-five days after getting the court order. About the Author: George Hostetler recommends Structured Settlements Guide for more information on structured settlement annuity options.

Get your Annuity questions answered... Subscribe to our Annuity Newsletter FREE! Your First Name: Your Email Address: Do you have an ezine? List your ezine in our Free Newsletter Directory!

 

Home  |   Ask the Annuity Expert  |   Annuity Archive  |   Annuity RSS Feeds  |   Advertise  |   Sitemap