by Structured Settlement Watchdog
Shattered Glass Ceiling of Incredulity Over “Incur Interest“
A structured‑settlement brokerage firm recently shattered the glass ceiling of incredulity by claiming that a “popular choice among plaintiffs” is:
“delayed payments that don’t pay out until the plaintiff reaches retirement. To ensure a comfortable retirement, the money will stay out of reach and incur interest in order to grow the total amount.”
As Ben Marcus once wrote:
“Submitting students to the rigors of learning seemed only to incur the wrath of many of them.” — Time, Jan. 8, 2001
The broker’s phrasing lands with the same awkward thud. And for good reason: “incur interest” is the wrong verb for what structured settlements actually do.
Very Interest-ing Key Differences in Terminology
Incur Interest
To incur interest means to become liable for interest as an expense or obligation — typically in the context of borrowing. You incur interest on a loan, a credit‑card balance, or an unpaid bill. The connotation is negative: a burden, a cost, something unwelcome.
Accrue Interest
To accrue interest means interest is accumulating over time, whether on an asset or a liability. It’s a neutral accounting term. For structured settlements or annuities, “accrue interest” is the correct description of how the insurer’s invested funds grow.
Earn Interest
To earn interest emphasizes the positive return on an investment. It’s the language of savings accounts, bonds, and annuities — and the most intuitive phrasing for consumers.
Why “Incur” Sounds So Wrong in a Structured Settlement Context
The broker’s sentence — “the money will stay out of reach and incur interest” — tries to describe beneficial growth on locked‑away funds. But “incur” implies a cost, not a benefit.
Even though “incur” appears in formal financial writing, it is almost never used to describe positive growth. In a retirement‑planning context, it sounds mismatched, overly formal, and subtly negative.
“Accrue” or “earn” would have been clearer, more accurate, and more aligned with how structured settlements actually work.
What Really Happens Inside a Structured Settlement
- An obligation ti make perioidc payments is assignment to a qualified assignment company
- The defendant (or liability insurer) pays a lump sum to fund a qualified assignment (a/k/a “Assignment Payment”.
- The assignee purchases an annuity (or, more precisely, a payment obligation) from a life insurer.
- The life insurer invests the funds and earns or accrues interest on its own portfolio.
- Those investment earnings support the guaranteed future payments.
- The plaintiff receives tax‑free periodic payments where the payments represent damages excluded under IRC §104(a)(2), or workers compensation IRC §104(a)(2), .
- The plaintiff does not incur any interest, debt, liability, or cost.
The broker’s phrasing wrongly implies the plaintiff is somehow paying interest to get their own money later — a total inversion of reality.
Why the Broker’s Claim Is a Total Howler
From the plaintiff’s perspective:
- The growth comes from the insurer’s investment earnings.
- The plaintiff bears no cost, no liability, and no interest expense.
- The payments are income tax‑free, risk‑free, and contractually guaranteed.
- Nothing about the arrangement resembles “incurring” anything.
Using “incur” here is like saying you “incur sunshine” on a beach vacation. Technically possible, linguistically absurd.
A Little Punnography to Lighten the Load
Little Miss Muffet
Sat on her tuffet,
Eating incurs and whey;
Along came a broker,
With pitches that choke her,
And frightened Miss Muffet away!
The Cambridge Definition Seals It
Cambridge defines incur as:
“to become subject to something unwelcome or unpleasant as a result of one’s own actions.”
So are we expected to believe that if you agree to a structured settlement with a delayed start date:
- Your money stays out of reach, and
- You become subject to something “unwelcome or unpleasant” — namely, paying interest?
Now there’s a real selling point.
Of course not. One does not “incur interest” in, or as a result of, a structured settlement.
A Final Word Before the Meme
Frank Abagnale could fake being a doctor for a week, but even he couldn’t make “incur interest” the right verb for a structured settlement.
INCURS‑A-WHEY!
