Structured Settlement Annuities Advantages of a Structured Settlement Annuity No Risks to Take, No Decisions to Make With a Structured Settlement Annuity, you can concentrate on recovering and healing, without the additional stress of managing a financial portfolio. The Structured Settlement Annuity ensures that the settlement funds intended to meet your future needs will be there. And its guaranteed payments are made directly to you, with no management fees. Tax Free Income Under Internal Revenue Code, Sections 104 (a)(1) and 104 (a)(2), the payments provided by a Structured Settlement Annuity are free of income tax. It is true that cash settlements are also tax free, but interest earned on their investments is usually fully taxable—and unlike a Structured Settlement Annuity, the return on such investments is not guaranteed(i). To illustrate the effect of tax free income: a person in the 31% income tax bracket would have to make investments that yielded 10% after administrative costs and fees in order to equal a 7% guaranteed yield from a Structured Settlement Annuity. Guarantees Even low risk investments do not offer guaranteed payments or returns. Payments from a Structured Settlement Annuity are contractually guaranteed according to a plan you design—for a specific period of time, or for as long as you live. Thus you can be assured that funds will be available for your unique needs.   Why Is This Choice So Important? Cash Can Be Quickly Depleted Though many people feel they can handle a large cash settlement, cash can quickly be spent by lending or giving money to family and friends; by a risky investment into a new business venture; by purchasing high expense items. Even with the best of intentions to set aside funds for the future, too often the money is gone prematurely. By offering designated, contractually fixed payment plans, a Structured Settlement Annuity prevents the depletion of funds. Future needs will be met. Families Need Protection In a large number of settlements, the injured person is the primary wage earner. After settlement, if the injured person can no longer work, or perhaps has a smaller earning potential, the family will depend on the settlement for living expenses. Because cash is so easily depleted, Structured Settlement Annuities provide a way to guarantee that the family will always be cared for. The injury victim can also use a Structured Settlement Annuity to fund the children's educational needs or structure payments to begin at retirement. Structured Settlement Annuities Can Provide Lifetime Financial Security Choosing the right Structured Settlement Annuity provider is important, because Structured Settlement Annuity payments are designed to fund long-term needs. When your payments stretch far into the future, you need to know that your settlement provider will always be there to make those payments, and make them in a timely and efficient manner. Furthermore, if questions or concerns arise, you want to receive reliable, courteous service. At LMGA, only top-rated insurance companies are selected to provide Structured Settlement Annuities.   Show Me Let's look at a hypothetical case of a single mother and her son. Elizabeth, a 35-year-old single mother, and her 10-year-old son Jason were involved in a serious automobile accident, fortunately without catastrophic injury to either of them. One hundred thousand dollars ($100,000) was to be put into a periodic payment plan, and Elizabeth was presented with two plans from which to choose. Option 1: Lifetime benefit plan to Elizabeth with 20 years of payments guaranteed. Age Payment For life - $595 per month $142,800* (*The guaranteed 20-year minimum) Total expected payment with normal life expectancy $350,000 Option 2: Monthly payments made to Elizabeth for 30 years (to age 65) with additional payments made at age 45, 55, 65. Age Payment To age 65 - $575 per month $207,000 Age 45 $10,000 Age 55 $15,000 Age 65 $20,000 Total guaranteed payment $252,000 Jason was awarded $50,000, which was also put into a periodic payment plan, as shown here. Age Payment Age 18-22 $15,000 per year Age 25 $10,000 Age 30 $15,000 Age 35 $25,000 Total guaranteed payment $125,000 Elizabeth could be assured that the future needs of both her and her son had been considered and addressed.   How Does a Structured Settlement Annuity Work? The Settlement Agreement At the time of your settlement, you design your periodic payments, which can be made at specific times, such as the first of each month for living expenses; at your child's 18th through 22nd birthdays for education costs; at age 60 (for example) to enhance your pension benefits.   The terms of the payment schedule are written into your settlement agreement, and upon execution of that agreement, payments commence as scheduled. Please note that in order to preserve the tax free nature of the payments, once all parties agree to the settlement, including the structured payments, the payments cannot be accelerated or changed. The Qualified Assignment The party responsible for funding the settlement—that is, the party making your future periodic payments—may transfer its obligations to a third party. The third party is called an Assignment Company. To accomplish the transfer, the portion of the settlement that is designated for the future payments is paid to the Assignment Company. The Assignment Company then typically purchases an annuity from an affiliate life insurance company to provide your future benefits as agreed upon in the settlement.   (i) Guarantees are backed by the financial strength and claims paying ability of the life insurance company(s) issuing the annuity(s).