Annuity Settlements

Written by Jacey Harmon
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Annuity settlements, also known as structured settlements, are becoming more popular to settle lawsuits and pay out lottery jackpots. Annuity settlements can include a variety of annuities or just one. This type of settlement is very attractive for insurance companies and has benefits for the payee as well. Annuity settlements are funded by a single premium annuity and pay the settlement over a period of time.

Annuity settlements are structured to meet the specific needs of the claimant. They can include an initial lump sum to pay for immediate medical bills and loss of income. They may also include several annuities with specific purposes in mind. Medical annuities are designated for expected future medical problems. Income annuities are intended to replace lost income or provide extra income. Education annuities are for funding higher education needs.

Annuity settlements are beneficial to the insurance companies, as they release the insurance company of any liability of the claim. They are also funded with a lower investment than if the payments were to be made in one lump sum. The annuity can earn interest while the payments are being made. This growth is what allows the insurance company to pay the claim with a lower initial payment. The reduced costs involved with using annuity settlements can allow an insurance company to be more competitive in the market place.

Benefits of Annuity Settlements to the Claimant

Annuity settlement payments are guaranteed by the funding annuity. This guaranteed income is a very attractive benefit for claimants. The payments are also received without any taxation. The total of the payments is likely to be much higher than what is offered in a lump sum. The annuity settlement also removes any burden the claimant may feel if given the task of managing a large sum of money.


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