by John Darer® CLU ChFC MSSC RSP CLTC
Are there any fees when you agree to a structured settlement annuity?
It's an interesting question because there are no external fees with a structured settlement annuity. Some individuals will evaluate a structured settlement proposal for you and charge a separate external fee, but this will not affect the cost of the structured settlement annuity. Some feel such money is well spent. Unless you have negotiated to pay an external fee, you do not have to fork over a check to an agent or broker. The structured settlement broker or settlement planner who places, or co-brokers the structured annuity that funds the periodic payment obligation set forth in the settlement agreement you sign, is paid a commission by the annuity issuer. To the best of this author's knowledge there is no trailing commission paid (like the 12b-1 fee on a mutual fund).
A structured settlement annuity is a financial instrument issued by a life insurance company and commissions can are only issued by those companies to licensed agents or brokers authorized by those companies to place the structured settlement annuity product.
The commission paid to the structured settlement broker or settlement planner is factored into the expenses of the annuity issuer in pricing its structured settlement quotes, just like its advertising costs, salaries and other overhead expenses. In the United States the commissions are all the same regardless of annuity issuer. Clearly from a pure "amount of commission" standpoint there is no incentive to place business with one company over another. State anti-rebating statutes prohibit licensed insurance agents from reducing or paying any part of their commissions to annuitants.
A number of structured settlement brokers and settlement planners, including this author, use a structured settlement affidavit or declaration to set forth the amount of commissions paid.
If there is a qualified assignment there is a fee of $0-$750 on qualified cases. There is a $1000 fee with one vendor who takes on non qualified assignments. A qualified assignment benefits all parties. It is essential if a security interest in the assignee is desired.
In the UK, commissions for placement of annuities used to comply with periodical payment orders are variable and therefore priced accordingly.
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Contact structured settlement expert John Darer® at 888-325-8640 for further information
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