Benefits of Structured Settlements

Today in the context of industry change and the need for industry growth, what exactly are the benefits of structured settlements? And will marketing those benefits be enough to ensure the future success of the National Structured Settlements Trade Association (NSSTA) and the structured settlement market?

NSSTA President Michelle Caine highlighted the strategic importance of these questions during her inaugural address at the 2019 NSSTA Annual Meeting.

Independent Life supports NSSTA’s current educational initiative and promotes many of the standard structured settlement benefits on our website and we are doubling down on developing and promoting the following additional structured settlement benefits:

  • Our unique Payee Protection Policy provides our structured settlement payees with security against unfair transfer petitions.
  • Our two-tier medical underwriting process offers superior analysis for catastrophically injured plaintiffs.
  • Our non-qualified product expands the types of cases that qualify for structured settlement annuities.
  • In collaboration with our agents, we are constantly expanding our knowledge of how structured settlement annuities can be integrated with government benefits and other financial products as strategic products to enhance comprehensive settlement plans.

To be effective in growing the structured settlement market, however, NSSTA and its members cannot simply focus on the benefits of our products and our traditional target customers – defendants; plaintiff attorneys; judges and mediators.

In a changing market, we must also proactively seek out and engage the emerging settlement planning stakeholders and influencers – financial planners; special needs attorneys; trustees; guardians; life care planners; MSA professionals and care managers – as well as our critics.

Yes, we can learn from our critics. For example, in a leading California legal textbook about Special Needs Trusts, here is what two leading California special needs attorneys write about structured settlements:

  • "Plaintiff's trial attorney may mistakenly believe (or be misled into believing) that a structured settlement annuity is the only effective tool for the major part of the settlement funds."
  • "At times a structured settlement is funded for a person with a disability without consideration of the unique needs to that individual."
  • "The most common issue is too much cash in the structured settlement and not enough cash outside the structure."
  • "It is insufficient to retain just enough cash to purchase a home and a van; there also must be a financial plan to maintain the home and van and consider replacement costs"
  • "When a settlement has been funded primarily in a structured settlement annuity, there is little protection from inflation."
  • "Annuities purchased in a time of low interest rates are likely to grossly under perform when compared to a well-balanced portfolio of stocks and bonds."
  • "If the SNT beneficiary has an emergency or needs cash quickly, the settlement annuity will not advance payments."
  • "It is imperative that practitioners insist on a commutation rider whenever there is a possible estate tax situation."
  • "Once the structure is funded, [the structured settlement broker's] job is done. It is then left to the SNT trustee and special needs practitioner to work with the structured settlement for the rest of the person with the disability's life."

These types of warnings and cautionary notes about structured settlements may seem unfairly negative or even inaccurate – to NSSTA members. However, they represent an important part of the market dialogue that NSSTA wants and needs to positively influence.

It is also seems significant that the sources of these influencer comments are not traditional structured settlement customers or marketing targets of NSSTA and its members.

What, therefore, might be the lessons we can take away as they relate to the benefits of structured settlements in a changing market?

First, we can’t just merely acknowledge a changing market. We must study it and get a better understanding of both the emerging influencers and their perception of the role structured settlement annuities play in their professional communities of practice.

Second, we shouldn’t continue to reflexively market traditional structured settlement benefits to a changing market without considering current market reactions and new market opportunities for structured settlement annuities.

Third, concurrent with any new external marketing of structured settlement benefits, we should initiate parallel internal programs to re-think and re-position NSSTA’s member education to align more inclusively with the shifting market.

Fourth, and most importantly – we must all think positively and creatively.