By [http://ezinearticles.com/?expert=Patrick_Farber]Patrick Farber
Clients have three payment options when their claim or lawsuit is settled: 1) a lump sum cash settlement, 2) periodic payments through a structured settlement annuity or 3) a combination of cash and structured payments.
In years past, personal injury settlements always involved lump-sum payouts. While the payout was tax-free, the money earned from the settlement was taxable unless invested in tax-free municipal bonds.
Clients choosing cash settlements assume the risks associated with their investments during both stable and volatile economic times. Clients requiring lifetime care and support usually do not have the luxury of being able to weather market ups and downs and fluctuating incomes, especially when unforeseen medical emergencies are part of life. Managing the lump sum to last possibly for a lifetime is also a concern.
To reduce the risks associated with lump sum payouts, the Internal Revenue Service allows defendants to purchase insurance annuities to fund settlements to injured parties with all proceeds from the annuities tax-free.
Using annuities, injured parties receive guaranteed tax-free income benefits issued by an A or A+-rated life insurance company. Clients can decide to receive 100 percent of the funds through a structured settlement annuity or a combination of an annuity with a cash component for immediate or emergency situations.
Settlement Safeguards
The safety and security of a structured settlement annuity depends, of course, on the financial stability of the life insurance company responsible for paying the benefits. That is why only highly rated life insurance carriers are used.
State and federal solvency standards and regulations protect annuity policyholders in a number of ways. Regulators use conservative accounting and investment rules, which keep insurers from investing heavily in risky investments. Investments are typically high-quality investment grade fixed income securities. Structured settlement annuities enjoy competitive returns compared to other conservative investments in addition to their tax-free status.
In California, companies offering structured settlements must be first approved by the California Department of Insurance. The department evaluates the insurance carrier's solvency and whether the carrier complies with California regulations. Carriers are also subject to mandatory annual audits and other financial compliance requirements.
By regulation, all annuity reserves must have assets that are equal to or exceed the corresponding payment obligations. In addition, the assets supporting these reserves may not be removed from the life insurance company. Reserve sufficiency is mandatory and is frequently monitored by state legislators and auditors. State insurance commissioners have developed these regulations to preserve the solvency of general accounts in which assets are held so that contractual obligations to policyholders are met. These general accounts support only the obligations of the insurance companies--and not the obligations of a parent company or other subsidiaries.
In other words, parent companies are prevented from raiding capital from their profitable, well-capitalized life insurance company subsidiaries.
With structured settlements, personal injury clients have the peace of mind of knowing that the underlying assets enabling them to receive compensation from their injury are sheltered. Attorneys can confidently assure clients that these assets will continue to produce regular returns designed to meet immediate and long-term needs.
Pat Farber has 30 years of experience in the structured settlement field. He specializes in settlements involving medical malpractice, physical injury, non-physical injury, product liability, workers' compensation, mass torts, punitive damages, employment, construction defect cases and attorney fees in court hearings, arbitrations and settlement conferences throughout the West Coast and in other areas of the United States. Pat has personally placed over $1.75 billion in annuity premiums and U.S. Government notes. E-mail: [mailto:pfarber@patrickfarber.com]pfarber@patrickfarber.com, 800-734-3910, http://www.patrickfarber.com
Article Source: [http://EzineArticles.com/?Structured-Settlements-Versus-Lump-Sum-Payouts&id=6527122] Structured Settlements Versus Lump Sum Payouts
Get Instant Cash From Structured Settlement Companies
By Jeffery Fields
If you have been in an accident and suffered some type of personal injury as a result then there are some things that you should know about the payments. Typically a judge is going to allow for what is called a structured settlement which means that you get payments for a certain period of time. In this event and if you have racked up a ton of bills while being in court over the issues you might find that one of the good structured settlement companies is your best choice for getting the money that you need now.
The main reason that you might need money now is for the bills that you have not been able to pay while you have been injured. In addition there are probably a lot of other expenses that you have accrued while being ill including expensive and costly medical bills that you might not have any way of paying. Structured settlement companies can really help you in this situation by getting instant cash to you for help with dealing with these bills.
If you are in this situation then finding the instant cash is easy. The first step is just to make sure that you are ready with all of the documentation about your s structured settlement. You can actually get the company to give you a lump sum for all of your payments or possibly just a lump sum for a few of your payments depending on your current bills and needs. Keep in mind that if you take a full lump sum that you will no longer have the rights to your structured settlement.
It is always a good idea to talk to more than just one of the structured settlement companies as a way of protection and making sure that you get the most money if you are going for a total lump sum. There are a variety of different fees and interest rates that could potentially be charged and you want to make sure that you get the most money out of your settlement. Taking your time, while difficult when you need money now, is really important in this case.
There are some additional facts that you will need to be familiar with. One of these is the type of settlement that you have. There are actually some settlements that are not valid outside of the state in which you reside so these are going to be harder to find a structured settlement company to work with. However there are a wide variety of different legal aspects that are also important.
Make sure that you are familiar with the laws where you live. There are some states that have additional protections built in to help protect those trying to sell their structured settlements. So make sure that you know the laws and understand your rights as well as the rights of the potential buyer. There are also a variety of different types of options that you should consider always looking for the one that is going to give you the most peace and security for a period of time.
Article Source: http://EzineArticles.com/?expert=Jeffery_Fields
http://EzineArticles.com/?Get-Instant-Cash-From-Structured-Settlement-Companies&id=5910801
