by John Darer CLU ChFC MSSC CeFT RSP CLTC
If you have a structured settlement that was established in the 1990s or 2000s, or you set one up as the guardian for your children, protect yourself and/or your loved ones from secondary market charlatans peddling structured settlement swaps.
What are Structured Settlement Swaps?
- Some structured settlement payment buyers are encouraging structured settlement swaps.
- Structured settlement swaps are a term to describe a two step shady sale pitch to first hustle people to sell their long term structured settlement payments for pennies on the dollar and
- then suggesting that the poor annuitant use their fractionated “wealth” to, among other things, buy structured settlement receivables (factored structured settlement payments from other people who’ve also sold their structured settlement payments for pennies on the dollar).
Don’t enter the Structured Settlement “Swapstakes”
Keep these points in mind if you encounter a structured settlement factoring intermediary, financial adviser or “settlement planner” coming at you with a “structured settlement swaps” approach.
1. Misdirection concerning the rate of return of your structured settlement
The structured settlement payment buyers may try to unsettle people with long term structured settlements established in the 1980s or 1990s, by speaking of low interest rates. In my opinion it’s a misdirection scam. Here’s why.
The rate of return on your structured settlement is the Internal Rate of Return on using the cost when the structured settlement was established
If you have a structured settlement established in the 1980s from a large highly rated insurer, you are getting a safe rate of return on on the original investment that may be better than the average rate of return in the S&P500 for the last 20 years. On September 5, 1987 the 30 year Treasury was paying a 9.96% yield. On September 3, 1990 it was 8.92% , September 3, 2000 it was 4.69%. By September 1, 2010 it was 3.77%.. Much is made of recent stock market returns. However the sales pitch may not take into account tolerance (or lack of tolerance) for the inherent volatility due to real human emotion that comes with investing in volatile markets.
Consider the following statistics compiled by JP Morgan Asset Management March 2025:
01/03/2005-12/31/2024 10.4%
Missed 10 best days 6.1%
Missed 20 best days 3.5%
Missed 30 best days 1.3%
Missed 40 best days -0.6%
Missed 50 best days -2.2%
Missed Best 60 days -3.7%
Updated
Also see Structured Settlement Rate of Return Compared to Alternative Investments (4structures.com)
2. Swapping a Stable Value 1990s/2000s Tax-Free Structured Settlement for Taxable Factored Structured Settlement Receivables Doesn’t Make Sense
If you are receiving payments from a structured settlement that arose from a personal physical injury or wrongful death, the periodic payments are income tax free. While the sale of structured settlement payment rights would not be taxable, interest on the proceeds from a factored structured settlement investment would be taxable.
3. Structured settlements are straightforward. Structured Settlement Receivables Are Not. The wrong vendor can be financially lethal
Despite often being falsely marketed as annuities…
- There have been legal cases where investors in structured settlmeent receivables have lost all their money in such investments. See
- At the time of the original publication, there were ongoing legal cases in Pennsylvania, Maryland, New York, Virginia and Arizona where the money of investors in factored structured settlement payment rights may have been in jeopardy and investorsmay have incurred legal expenses that have eroded the value of their investment with no end in sight.
- Be wary of exotic investments such as purported advances of athlete contracts or an agent’s receivables or receivables of another celebrity packaged as structured settlements or annuities.
John Darer reviews the caveats of investing in structured settlement receivables in the following video that may be helpful to readers.
In conclusion, you would be wise to heed a warning of sorts from the 1980s “Never Mind The Bollocks!”
Last updated February 14, 2026