by Structured Settlement Watchdog
We continue our series "Dumbest Things Said About Structured Settllements" with the following that appeared in a December 5, 2010 article by Michelle Tornetta on Suite101
A. Any time you agree to a payout on an investment such as an annuity or cash award in a legal claim that is spread out over time with multiple payments, it would be considered a structured settlement.
Comment
The words "structured settlement" are thrown around loosely by the uninformed and/or those who wish to misinform these days. The aformentioned explanation IS NOT what a structured settlement is. So What is a Structured Settlement?
B. It's been found that when lump sums are paid out, it will only last about five years before the payment amount is depleted.
Comment
Despite a tremendous amount of anecdotal evidence, in 2009 an NYU law graduate named Jeremy Babener published a paper that laid waste to there being an empirical study that supported the "90% gone in 5 years" hypothesis whichTornetta appears to be citing to.
C. Likewise, if you're financially savvy, you may want to invest the money on your own for a higher dividend.
E. Another thing to look at are the set up fees and commissions the issuing annuity company charges. This can significantly reduce the amount of money you would expect to receive compared to the amount of the actual settlement amount.
Comments
- Generally there is a flat 4% commission on structured settlement annuities.
- There is a 3% gross commission when a structure is funded with USAA Life insurance Company.
- Rebating of such commissions to structured annuity buyers, or to annuitants, is not permitted under state insurance laws.
- There are no set up fees involved in settlement up structured settlements. If the structure is set up by way of a qualified assignment then there is an insignificant ualified assignment fee that varies between $250 and $750
- Michelle Tornetta cites to "Cornell University Law School: Structured settlement factoring transactions" which leads me to believe she has her wires crossed between structured settlement factoring transactions and structured settlements. The payment of referral fees to structured settlement consultants or other financial advisers as part of referring seller of structured settlement payment rights absolutely affects the amount that the selling annuitant will receive.
Dumbest Things Said About Structured Settlements is an ongoing Structured Settlements 4Real series to highlight misinformation about structured settlements and correct it. Some structured settlement misinformation really borders on the absurd and we aim to "out it" in a meangful but entertaining way. The structured settlement watchdog is in favor of well researched articles about structured settllements. He reserves the right to exercise his opinion by "lifting his leg" on articles written by those who have so obviously not done their homework or those who intentionally misinform the public about structured settlements.
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