What is a Structured Settlement Consultant and Why Do You Need One?
According to the National Structured Settlement Trade Association, “Structured settlement consultants are available to discuss your needs and hopes for resuming your life after your injury. They will educate you about what a structured settlement is and if it is a suitable solution to meet your needs and future goals. Since structured settlements offer flexible payment design, it is possible to meet a variety of needs you may have.”
Just like most attorneys, structured settlement consultants are typically only compensated if you win your case. The difference is, they only receive a commission if you choose to place some of your settlement award in a structured settlement and their commissions are not paid by you – they are paid by the life insurance companies issuing the annuities that fund the structured settlement.
This means there is no direct charge or fees for their product sales and that some, but not necessarily all, of their additional services will be paid for as part of the life company’s contingent commissions.
If you are a plaintiff in a personal injury lawsuit, it would be in your best interest for you and your attorney to be represented by your own (non-defense) structured settlement consultant.
Below is a list of some of the common services structured settlement consultants provide before, during and after a settlement negotiation – in addition to marketing and selling structured settlements.
Economic Loss Analysis
Structured settlements are used as a good way to calculate future economic losses. This typically falls into two buckets: medical expenses and income. To make these estimates, you usually need a life care plan for future medical expenses and an economist report to determine future impaired earnings. With those reports, the structured settlement consultant obtains quotes from one or more structured settlement annuity providers. The quotes can then be compared, and potentially be utilized in a negotiation or at trial, as an alternative method for calculating and proving future economic damages.
Cost and Benefit Analysis
The main role for a structured settlement consultant is to help personal injury plaintiffs create a plan for how to optimize their settlement award, typically using a structured settlement as the foundation of their plan. They do this by analyzing quotes they have received from life insurance companies like Independent Life that specialize in structured settlements. The price of a structured settlement depends on interest rates which fluctuate within the financial markets. Once a structured settlement is funded, the life company receives the award dollars (premium) and makes an investment. These investments are regulated by state insurance departments and are generally high-grade corporate bonds.
Age Rating Analysis
Many structured settlements are set up to make payments for the rest of the injured person’s lifetime. When medical conditions suggest the injured person has a less than normal life expectancy, the settlement consultant may ask the life insurer to have its underwriter, a risk assessment professional, conduct a medical analysis to assign what is referred to as a “rated age.” If the underwriter determines the injured person nonetheless has a normal life expectancy, the rated age will be the actual age.
However, if the underwriter determines the injured person has a less than normal life expectancy, they may assign a rated age greater than the actual age and the life insurer will use the rated age to determine the benefits it can pay. When the rated age is higher than the actual age the lifetime benefits will be higher. The structured settlement consultant plays an important role in identifying those individuals who might meet the criteria to receive a rated age and will manage the process of obtaining and submitting the required medical information to the life company’s medical underwriters.
Medicare Set Aside (MSA) Services
When a personal injury or workers’ compensation settlement includes payments to cover future injury-related medical expenses that would normally be paid by Medicare, Medicare requires the parties to the settlement to “protect Medicare’s interests”. One way to accomplish this requirement is to allocate an appropriate amount of settlement funds into a Medicare set-aside (MSA) account. Because structured settlements provide a significant cost advantage compared to lump sums for funding MSAs, some structured settlement consultants have gained expertise in matters relating to MSAs and the Medicare Secondary Payer Act.
Lien Resolution Services
In complex personal injury cases, many agencies or entities may have provided pre-settlement services and therefore have liens, or claims against, settlement dollars. These agencies and/or entities may include Medicaid, Medicare, ERISA and other health care providers. These types of liens can prevent the successful resolution of a settlement. Resolving these liens, which involves contract review and analysis, communication, negotiation and allocation can be time consuming and expensive and requires specialized skills and experience which some structured settlement consultants offer themselves or thru affiliates.
Personal injury settlement planning and negotiation, especially in complex cases, require different subject matter expertise than personal injury litigation. Many attorneys who are outstanding litigators who devote their lives to trial practice may not have the time or interest to become expert negotiators or to learn the details of settlement planning issues frequently addressed during negotiation. Negotiating and planning personal injury settlements, in which structured settlements play an important role, have become increasingly complex and important. Settlement planning professionals, including structured settlement consultants, can offer their experience and expertise to facilitate the negotiate the process and help improve your results.
Sample Closing Documentation
Although your attorney has the ultimate responsibility for drafting your settlement documentation, structured settlement consultants frequently provide sample “closing” documents for structured settlements consistent with the approved financing and approved by the annuity provider. Both the consultant and representatives of the life company can provide years of experience addressing many structured settlement document and drafting issues. However, your attorney retains full legal responsibility for reviewing all such documentation and adapting it to protect your legal interests.
Settlement Transfer Protection
The purpose of a structured settlement is to provide you with a safe, secure, dependable promise of tax-free payment over time. Be aware, however, that companies exist in the market who use highly persuasive marketing tactics to try to convince you to transfer your structured settlement payments to themselves, often offering inadequate compensation. Unfortunately, unless you contact them, your attorney and your structured settlement consultant won’t be aware of these unethical sales attempts and won’t be available to help you. Independent Life is the first and only structured settlement annuity provider to offer structured settlement recipients a Payee Protection Policy – and at no additional cost. Ask any of our structured settlement professionals for details.