by John Darer CLU ChFC MSSC CeFT RSP CLTC Updated May 1, 2026
How Pre-Funding a Structured Settlement Benefits the Parties to the Settlement
Avoiding rate drift and streamlining the closing process can be advantageous to all parties.
An insurance company or defendant agrees to pre-fund a structured settlement prior to receiving a signed court order or release benefits themselves as well as other parties involved in the case, particularly when daily rates have been quoted, interest rates are declining, lock in fees may apply preserve rates for exteneded time frames, and/or when an exact benefit amount is required for court submissions.
Preserve a Favorable Rate on a Discounted Cash Flow
Following the negotiation of a hard-fought settlement in a wrongful death medical malpractice case, construction accident case, or aviation accident settlement, court approval may be required.
The process of obtaining court approval can take months, and in some cases, years, due to complex procedures and significant backlogs in the court system. Surrogate’s Courts in and around New York City are particularly slow. A guardian ad litem may need to be appointed, and their timeline may not align with an action plan influenced by fluctuating interest rates. Wrongful death cases involving a public administrator add yet another layer of complexity.
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What is the Public Administrator?
The New York Public Administrator is one of a chosen office of attorneys in each county that the Surrogate’s Court often calls upon to administer to non-standard probates and estate administrations. The Public Administrator generally has the job of handling estates of people who die without a Will and who have no close relatives who are one way or another, unable to administer the estate.
Example of Where a Public Adminstrator Comes Into Play
Unmarried undocumented non US citizen dies in tractor trailer accident on I-95 South in the Bronx, New York USA. Sole survivor is a child. Child’s mother undocumented. Child has a claim. Mother of the child cannot file a wrongful death claim on behalf of the decedent’s Estate as she is not a US Citizen. If child’s natural representative is undocumented then it goes to The Public Administrator in the county where the claim or suit is brought.
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One of my clients encountered a Court in Connecticut that wouldn’t even commit to a date for a hearing. Sometimes delays are the result for the time it takes for the plaintiff’s lawyer to draft documents or for defense counsel to review them. It could also be a delay because a minor plaintiff needs to be examined by a doctor
When Court Approval is Required the Court must consider the actual Structured Settlement Payments it is asked to approve
In order to fix the benefit, the structured settlement consultant must “lock-in” the benefits to preserve the negotiated cost for those benefits.
Standing at the intersection of daily rates, lock in fees, fee free lock in periods of different lengths that may vary by carrier, desire to diversify…
The problem really kicks in when all these factors gang up at once. Some carriers offer free lock-ins for 6 months, others for 60 or 90 days. When handling large settlements that demand prudent diversification, it’s like stepping into a circus act—because once those free periods vanish, some charge lock-in fees that can add up. Suddenly, you’re the hapless performer trying to keep a dozen spinning plates from crashing to the floor!
The Solution is a “Pre-Fund Refund Letter”
To encourage insurers and defedants to fund structured settlements in advance of a release or court approval, most life insurance companies that issue structured settlement annuities will issue some sort of prefund-refund letter that says to the effect that the life insurer will refund the premium paid, if the court does not approve of the settlement. So there is no risk to the insurer or defendant to fund the structured settlement.
This solution has worked with some of the world’s major insurers on cases involving significant sums of money in the millions of dollars.
When it comes to small settlements in the $25,000–$50,000 range, the funds often sit in short-term reserves, earning little or no interest since they need to remain easily accessible. So why not pre-fund the structured settlement after securing a pre-fund premium refund letter from the annuity issuer through your trusted structured settlement broker?
Last updated May 1, 2026
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