Frequently Asked Questions

What is a structured settlement?

A structured settlement is an agreement utilized in the resolution of a dispute where the plaintiff receives future payments in lieu of a lump sum. It can be used for the full amount or a partial amount of the plaintiff’s recovery. The payments can be made in regular installments, such as monthly or annual payments, or in lump sums. The payments can begin immediately or be deferred to a later date. The party taking on the obligation to make the future payments typically purchases an annuity from an insurance company to guarantee the payments are made in full. This arrangement provides security to the plaintiff and removes their funds from the "ups and downs" of the market.


What are some common needs that a structured settlement can help with?

Since there is a lot of formatting flexibility for how the future payments can be issued to the plaintiff, a structured settlement can meet a wide scope of needs. Some examples include wage replacement, future medical needs (such as rehabilitation and attendant care), college tuition, specialized transportation, and retirement.


Are the payments taxable to the plaintiff?

Beginning in 1982, Congress enacted favorable tax legislation to encourage the use of structured settlements. Under Section 104 (a)(2) of the Internal Revenue Code, the proceeds from a personal injury settlement are excluded from gross income. Therefore, there is no income tax paid on the future payments made to the plaintiff.


Can the payments be altered after the structured settlement has been created?

No. Once the documents have been completed and the policy has been issued, the payments cannot be accelerated, deferred, increased, or decreased. Payments will be issued for the exact amount and delivered on or before the dates outlined in the policy.


Can a structured settlement be established for a minor?

YES!  In fact, structured settlements are often required by judges around the country to protect and grow the minor’s settlement recovery. By using a structured settlement, the future payments can be arranged so that the minor does not receive a large lump sum on their 18th birthday, but instead receives the money over a longer period of time.


What is a rated age?

A rated age is an adjusted age for the plaintiff, as determined by a medical underwriter after careful review of the plaintiff’s medical records. The rated age is used to calculate the cost and benefits of a life annuity for the plaintiff. The use of a rated age impacts the economics of the annuity for the plaintiff in a favorable way.


What happens to the payments after the plaintiff’s death?

Any guaranteed payments that remain will still be paid. The plaintiff has the option to designate one or more beneficiaries to receive the guaranteed payments due after their death. The beneficiary can be changed at any time prior to death, as long as Independent Life is notified in writing with a notarized signature. If no designation is made, the plaintiff’s estate will receive the guaranteed payments due after death.