What Structured Settlement Annuity is Right For Me?
Posted on November 6, 2013
Structured Settlement Annuities come in all shapes and sizes. The key when purchasing one is finding the right one to fit your personal goals.
The primary benefit of a Structured Settlement Annuity is the higher rate of return when compared to Single Premium Immediate Annuities and/or Fixed Deferred Annuities. Usually you can expect to receive up to 3% higher effective rates of return when compared to direct annuity purchases from an insurance company.
The reason for this higher rate of return is because the original owner is bailing out early on their payments and that creates a cost savings for you as the buyer.
If you were to look at a Single Premium Immediate Annuity with an insurer you could put $100,000 in one lump sum, and start receiving monthly payments of principal and interest next month for life, or for a set number of years, with or without a cost of living adjustment rider. With a Structured Settlement Annuity, you don’t have the ability to adjust the payment schedule. You would pick an available annuity out of inventory that best matches their personal goals in this instance.
With these annuities, depending on what fits you best you could have a 20 year payment schedule or a 10 year schedule that begins 11 years from now, or anywhere in between.
Pre-owned Annuities also have different ownership types. They could be directly assigned to you, or pre assigned to a trust which in turn reassigns payments to you. Be sure you understand the details before buying.