When discussing structured settlement annuities with anyone, the question that often comes up is “Are they safe?” That’s understandable. The last thing anyone wants to worry about is the long-term reliability and safety of their money.

Heavily Regulated Industry

Structured settlements are funded by annuities from highly rated life insurance companies. While many industries experience their ups and downs, the life insurance companies that write structured settlements are known for their consistent strength.

One of the reasons is that they are heavily regulated by insurance commissioners in all 50 states. State laws are clear that insurance companies cannot make risky investment decisions with the underlying assets of these annuities. About 95 percent of the investments are typically in investment-grade bonds and Treasury notes. The remainder is in blue chip stocks. This gives injured parties the peace of mind of knowing that fluctuations in stock and bond prices won’t affect the locked-in interest rates of the annuity investments.

Life Insurance Reserve

By law, reserves must be set aside by the life insurance company that are equal to or exceed the company’s corresponding payment obligations. 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.

With structured settlements, injured parties are in better control of their financial future, confident in knowing that they will receive tax-free income exactly as is laid out in their settlement agreement. That’s financial security you can’t often find in today’s economic environment.

Here’s more information about structured settlement safety from the National Structured Settlements Trade Association (NSSTA).

For any questions about structures, please give me a call–Pat