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What Are Structured Settlement Annuities (SSAS)?

An Annuity is an agreement between a client and an insurance company which allows the repayment of a premium to be done over a period. The Annuity agreement has both the characteristics of both insurance and an investment policy. Structured settlements have a link to annuities since many consider them as effective ways of delivering funds the people who need it. For more details, you can check on the website https://www.debt.org/advice/annuities/ to find more on structured settlement annuities.

A structured settlement Annuity is usually used in resolving the personal injury incidents. The Structured Settlement Annuity which pays in a predefined frequency is utilized in the personal injury cases. Currently, the SSAs are receiving support from various quarters in the Country. Those that have affirmed their support include the American Association of people with Disability, trial bar, National Consumer League amongst others. You can visit the website https://www.law360.com/articles/763833/pros-and-cons-of-structured-settlement-annuities to view some factors to consider in settling for Annuities.
Let us have a look at some of the merits and demerits of Structured Settlement Annuities that you need to consider as you embrace its use.

Advantages of the Structured Se Annuities settlement

1.Provides a plaintiff with a credible and substantive tax benefit
When a plaintiff opts for the out of court settlement agreement, he or she is likely to a significant tax benefit because personal injury settlements in the United States are considered as “tax-free.” The United States Tax Code, therefore, exempts the plaintiff from incurring a tax burden. This is not an assured however since there are some exceptions where some portions of the settlement are legally taxable. For instance, interest may accrue from the settlement and will need to be taxed. This is why you need to discuss well with your tax attorney, Certified public accountant or Personal Injury attorney. You can go to http://injury.findlaw.com/accident-injury-law/structured-settlements-pro-s-and-cons.html to get finer details.

2. Annuities are protected by State Insurance Laws
The obligations of an insurer are always covered in States that have annuities protected under the State Insurance Laws. Some States in the Country have a safety forum for any insurance companies that go bankrupt hence shield them from a possible shutdown. The Insurance companies and policy claims remain operational.

3. The certainty of payments to plaintiffs over a fixed time frame.
Plaintiffs who opt to receive the Structured Settlement Annuity are assured of receiving their payments within a specific period. The other good thing is that, in other cases, lump some payments may be offered in cases that involve minors, which in turn gives space for long-term investments. Injuries that will require future medical expenses will be catered for by this long-term investments.

4. Agreements for parties who are geographically apart
A Structured Settlement gives a conducive forum for people who are far from each other to arrive at an agreement. People who are apart can be negotiated for and find an agreement that is both acceptable to the plaintiff and the defendant.

Disadvantages of Structured Settlement Annuities

1.hidden charges or tax
Certain parts of the Structured Settlement Agreement are taxable. These include punitive damages, fees charged by the attorneys, and others can impact negatively on the money the plaintiff receives, whether in lump-sum or a fixed, regular payment.

2. Reluctance from Insurance Companies to disclose the amount they will give
In the recent past, insurance companies were very reluctant to tell clients how much money they pay to purchase an annuity that covers the amount of the settlement. Lack of this information renders the plaintiff’s attorney clueless since he cannot be able to make a complete assessment. However, currently, some states have come up with a disclosure law that is shielding clients.

3. Low Confidence from plaintiffs on negative economic conditions
Clients will at some point grow cold towards economic conditions like inflation that may occur anytime. Sudden changes like recession will drastically reduce the annuity payments.