by John Darer CLU ChFC MSSC CeFT RSP CLTC
When a structured settlement is finalized, the Defendant or (in most cases) its Insurer pays 100% of its cost of settlement
immediately and is completely released from the claims alleged by the plaintiff in the claim or lawsuit complaint.
Hypothetical Scenario
60 year old Jeffrey Triptenfeld was attending a party at a rooftop bar in Manhattan, when he tumbled over a low railing. The resulting injuries, were extensive painful and rendered Jeff unable to work for an extended period of time. Following a mediation at JAMS, his lawyer Gray T. Whiteshark of Carcaradon Carcarius and Snails, reached a nice settlement with the bar’s insurers, Dram Shop Insurance Company of New York, for $975,000 a portion of which is to be structured to provide stable income to Jeffrey so that he can delay receiving social security retirement until age 70 when it will be 75% higher than taking it age 62. The cost of the structure is $350,000 including the qualified assignment fee and will be placed with Metropolitan Tower Life Insurance Company.
How it Works
- The defendant pays the up-front cash portion of the settlement of $625,000 to plaintiff and plaintiff’s law firm for deposit into plaintiff’s attorney’s escrow account pending disbursement of attorney fees, costs, liens (if any with net to plaintiff).
- The defendant’s cost ($350,000) of the structured settlement portion of the settlement is also paid in full to the qualified assignment company, in this case MetLife Assignment Company, Inc., at the time of settlement by check or wire transfer. The qualified assignment company actually buys and is the owner of the structured settlement annuity, the payee has the right to receive the structured settlement payments [ Read more about how structured settlements work]
- New York State General Obligations Law section 5-1702, also known as the New York Structured Settlement Protection Act requires disclosures at the time a structured settlement is negotiated, of the cost of the structured settlement. Florida, Minnesota and Massachusetts have similar disclosure requirements as part of their structured settlement protection acts.
“But I read somewhere the Defendant Doesn’t Pay All of the Money when there’s a Structured settlement”?
If you read such information it is inaccurate and typically found on the websites of the bottom feeders in the structured settlement secondary market who use the misinformation in an effort to unsettle structured settlement annuitants to sell for pennies on the dollar.
What is described above in How it Works is how the majority of structured settlement transactions have happened in the last 40 years.
Last updated November 15, 2025