Here is a list of frequently asked questions (FAQ’s) regarding structured settlements. Click on the + symbol before any question below to see the corresponding answer. The first question will automatically close when you open any subsequent question. Any Arcadia Expert would be happy to answer additional questions or explain any answer in more detail. Visit the Contact Us page to locate an Arcadia Expert to talk more about structured settlements.

The Defendant or its Insurer makes a legally-binding promise to provide the future structured payments to the injured party, also known as the Claimant. The Claimant agrees to accept these structured payments and any immediate cash at the time of settlement in exchange for a release of the claim.

Structured settlement payments are funded with annuity contracts issued by highly-rated life insurance companies. The Defendant, Insurer or Assignment Company responsible for making the future periodic payments must buy and own the funding contract to assure that payments are tax-free as allowed by the Internal Revenue Code. Payments from the annuity contracts are sent directly to the Claimant.

Structured settlement plans can include payments for life or for fixed periods of time. When a structured settlement is guaranteed for a fixed period, guaranteed payments will continue being paid to a beneficiary or beneficiaries in the event of the Claimant’s death. Payments to these beneficiaries are also income tax-free.
Claimants and Defendants are never charged a fee for the establishment of a structured settlement. Structured settlement consultants receive compensation from the life insurance company or companies from which a structured settlement is purchased, in the form of commission. None of the future payments are altered in any way by this compensation.
Because of their clear benefits to both Claimants and Defendants/Insurers, structured settlements have been encouraged by the U.S. Congress since 1982, and in 2013 the Congressional Structured Settlements Caucus was formed to promote the use of structured settlements to resolve injury claims. Structured Settlements are endorsed by both the American Association of People with Disabilities (AAPD) and the National Organization on Disability (NOD). These experts all support structured settlements because they offer many benefits to injured people and their families, and represent an efficient and effective process for Defendants and Insurers.  Structured settlements also help preserve taxpayer dollars and reduce the burden on courts.
  • General Liability
  • Medical Malpractice
  • Auto Liability
  • Workers’ Compensation
  • Maritime
  • Railroad
  • Government
    • US Department of Justice
    • Municipalities
  • Non-Qualified/Non-Physical Injury Cases
    • Employment Cases
    • Attorneys’ Fees
No, the growth you would receive by investing the settlement money yourself is reportable taxable income. Structured Settlements provide tax-free growth.
1. A claim must be settled for the defendant or insurer’s promise to pay you certain amounts on the specific dates in the future. 2. Parties involved have unlimited freedom in setting up the structured settlement, but once the case is settled the terms of the settlement cannot be changed. 3. The structured settlement annuity is purchased from a Life Insurance Company. Another option is to use Treasury Bonds. Tax laws prohibit the claimant from owning the structured settlement annuity.
There is no typical structured settlement because each structured settlement is designed specifically for each injured person/claimant.  However, a common structured settlement can look like this. Upfront cash: A cash payment made at the time of the settlement made directly by the defendant to the plaintiff. Monthly Annuity: Annuity paid out on a monthly basis to help assist the injured person/claimant with routine, on-going expenses.  Lump Sum Annuity: Annuity designed to take care of non-routine expenses of the injured person/claimant years into the future.
Often breaks deadlocks between the claimant and the insurance carrier. Also structured settlements tend to settle the case a lot faster than a cash settlement.
Only you know what you need, so be sure to speak up about not only your current needs but also any needs that you can see in the immediate and distant future.
No, you are the recipient of the payments but you don’t own the annuity, therefore you cannot offer the annuity as a security for a loan.
You are not the owner of the annuity, but due to a law signed by President George Bush on January 23, 2002, some or all of your benefits may be redirected to a 3rd party only after strict compliance to rigid guidelines due to extraordinary circumstances and approval by a court in the appropriate jurisdiction.