by John Darer® CLU ChFC MSSC CeFT® RSP CLTC
Let’s Talk Structured Settlement Compensation
Virtually every structured settlement broker or structured settlement planner boldly states that either:
- They work for free
- There is no charge for their services
- There is no cost for retaining their structured settlement brokers
- There is no cost for retaining their settlement planners
How can structured settlement brokers and consultants afford to buy influence with trial lawyer associations if they work for free?
- If we’re being honest, it’s common knowledge to lawyers (but perhaps not to injured persons) that many of these structured settlement brokers, settlement planners and/or their firms are contributing big money to state and national trial lawyer associations to buy influence or access;
- sponsoring RIMS or other legal or insurance conferences, taking out big expensive full page ads in Business Insurance;
- paying money to the campaign of your lawyer’s favorite political candidate, taking your lawyers and colleagues to ball games in catered corporate suites, flying lawyers around in private aircraft, some boasting of virtually unlimited financial resources. It’s their marketing prerogative of course.
Structured Settlement Brokers or Settlement Planner do not really work for free
- For appointed agents of an annuity issuer (a population that includes settlement planners), compensation is paid by commission (or share of commission where there is more than one agent/broker planner) from the placement of a structured settlement annuity as a “qualified funding asset”.
- Some settlement planning/structured settlement firms disclose this upfront in their web advertising, others do not.
- This contingent compensation is not unlike the services of a real estate broker that you might engage, the lawyer that you retained to prosecute your lawsuit, or an agent that sells you a life insurance policy. A structured settlement annuity is an insurance product sold by licensed and appointed agents and/or brokers.
How much do Structured Settlement Brokers or Settlement Planners Get Paid?
Commissions Vary By the Type of Product Placed
A. Structured Settlement Annuity Funded Structured Settlements
The pricing of a structured settlement annuity, including the indexed linked annuity payment adjustment rider offered by Pacific Life, includes a uniform commission structure, which is 4 percent of the premium placed with the annuity company. As I understand it the uniform commission was intended to eliminate selection bias that might exist if one company paid more compensation than another. The qualified assignment fee (ranging from $0 to $750) is commissionable with some companies. In other cases it is not. Insurance laws in effect in most states expressly prohibit reduction of commissions or rebating.
No Assignment Fee/Not applicable: American General Life Insurance Company (AIG), Berkshire Hathaway Life of Nebraska, First Berkshire Hathaway Insurance Company and National Indemnity Company (reinsurance structured settlement), United States Life Insurance Company in the City of New York (AIG), USAA Life Insurance Company
Commissionable Assignment fee: Pacific Life Insurance Company, Pacific Life and Annuity Company and United of Omaha (Mutual of Omaha). have commissionable assignment fees
Non-Commissionable Assignment Fees: New York Life, Independent Life, Prudential Insurance Company of America, Metropolitan Life Insurance Company, Metropolitan Tower Life Insurance Company
B. Market Based Structured Settlements
There are different market based structured settlement options for both plaintiffs and attorney. Depending on the solution there could be recurring fees of1%, 1.14%, 1.5%, 1.75% or more charged annually, or debited (proportionately if not annually) from account balances on a quarterly basis. So a $1,000,000 into a market based structured settlement could cost $10,000, $15,000, $17,500 annually. Using a simple example, a 1.5% fee on $1,000,000 could result in $150,000 in fees over 10 years, even without any growth (15,000 times 10). Some providers offer volume discounts. One attorney fee solution provider charges 1% annually and then has breakpoints to lower charges at $5M and other levels.
C. Duration Based Compensation Model (Indpendent Life Insurance Company)
In 2021, Independent Life Insurance Company, a Texas based life insurnace company that only issues structured settlement annuities, introduced a 2%-4%-6% duration based compensation model. The lower percentage is for duartions under 10 years, the second from 10-20 year durations and the 6% is for 20 year plus.
The Indpendent Life move to a Duration Based Structured Settlement Compensation Model was seen partly in reponse to low short term interest rates during and coming out of the Covid-19 pandemic to create business opportunities. The 6% was a risk reward carrot on a stick in an attempt to attract longer term money to the company. For more information, please visit Duration Based Structured Settlement Compensation Model (4structures.com)
D. Funding Agreement Structured Settlements
Introduced by American General and US LIfe as a way to do deferred start dates on non qualified assignments. Funding agreements are not annuities and thus not subject to IRC 72(u). Furthermore compensation can be variable provided the Defendant or insurer meets certain asset requriements and satisfactorily completes a due diligence questionnaire. For more information, please visit Funding Agreement Structured Settlement for Taxable Damages (4structures.com)
Last updated October 3, 2025
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