- 10-year Simulation
10 Year U.S. Treasury 3.50% taxable 10 Year AAA tax-exempt municipal 4.01% tax-exempt Structured annuity IRR from A+XV AM Best rated company simulating same cash flow 5.03% tax-free* - 15- year Simulation
15 Year AAA tax-exempt municipal 4.66% tax-exempt Structured annuity IRR from A+XV AM Best rated company simulating same cash flow 5.50% tax-free* - 20 year Simulation
20 year US Treasury 4.49% taxable 20 year AAA tax-exempt municipal 4.78% tax-exempt Structured annuity IRR from A+XV AM Best rated company simulating same cash flow 5.69% tax-free*
Lifetime structured annuity payments, which may incorporate rated age pricing, may have even higher yields than those shown above. Unlike bond payments, structured settlement annuity payments can be customized. For example, while bond payments are traditionally paid on a semi-annual basis, the structured annuity payments could be paid monthly, quarterly, semi-annually, annually or even bi-weekly! They can also be immediate or deferred and have increasing payments
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Sources:
For T-Bond rates: Federal Reserve Statistical Release H.15. For Municipal Bond rates: Bloomberg.com. Rates as of 05/05/2008 used for illustrative purposes only. Structured annuity rates, based on "book" rates available during the week of 05/05/2008, using Metropolitan Life Insurance Company, New York, NY rated A+XV AM Best, Aa2 Moodys AA Standard & Poors for illustrative purposes. Actual rates subject to change and should be shopped and custom quoted to reflect your specific needs.
* all references to "tax-free" in this post refer to the income tax status of the payments
IRR= Internal Rate of Return
What is "after tax" yield on taxable investments like US Treasuries and Corporate Bonds? Click here. Use the after tax yield to compare to the structured annuity IRR. You can also it to get the taxable equivalent IRR on a structured settlement from the same table.
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