Frequently Asked Questions

Independent Life believes structured settlements can provide positive benefits for all people. We also believe information should be easy to find and easy to understand. Below you will find answers to the top questions about structured settlements and about Independent Life.

The Basics

What is a structured settlement?

Structured settlement is an agreement utilized in the resolution of a dispute where the plaintiff receives future payments in lieu of a lump sum. It can be used for the full amount or a partial amount of the plaintiff’s recovery. The payments can be made in regular installments, such as monthly or annual payments, or in lump sums. The payments can begin immediately or be deferred to a later date. The party taking on the obligation to make the future payments typically purchases an annuity from an insurance company to guarantee the payments are made in full. This arrangement provides security to the plaintiff and removes their funds from the "ups and downs" of the market.

What are some common needs that a structured settlement can help with?

Since there is a lot of formatting flexibility for how the future payments can be issued to the plaintiff, a structured settlement can meet a wide scope of needs. Some examples include wage replacement, future medical needs (such as rehabilitation and attendant care), college tuition, specialized transportation, and retirement.

Can a structured settlement be established for a minor?

YES! In fact, judges often require structured settlements to protect and grow the minor’s settlement recovery. By using a structured settlement, payments can be set up to be received over time or even at key moments in the minor’s life, such as purchasing a car, paying for college tuition, or even a down payment on a home.

Can I choose a structured settlement for a non-personal injury case?

Yes. Certain disputes or claims that are not eligible for an income tax-free qualified assignment per Internal Revenue Code Section 130 can still benefit from tax deferral through a non-qualified assignment. Like qualified assignments, non-qualified assignments enable two disputing parties to settle for future periodic payments with the obligation to make future payments being transferred to a responsible assignee and allowing the payer to write a single, up-front check and be released from future obligation. Compared to receiving a lump sum now, the payee gets the payments in a more tax-efficient manner as the money is distributed over time.

Cases eligible for non-qualified assignments include: punitive damages; attorney fees; employment disputes; divorces; and wrongful incarceration cases.

Payments

Can payments be adjusted after the structured settlement has been created?

No. Once the documents have been completed and the policy has been issued, the payments cannot be accelerated, deferred, increased, or decreased. Payments will be issued for the exact amount and delivered on or before the dates outlined in the policy.

Does the plaintiff have to pay income tax on structured settlement payments?

No. Thanks to favorable tax legislation enacted by Congress in 1982, (Section 104 (a)(2) of the Internal Revenue Code) the proceeds from a personal injury settlement are excluded from gross income. Therefore, plaintiffs do not have to pay income tax on the future payments.

What happens to the payments in the event a plaintiff dies?

Any guaranteed payments that remain will still be paid. The plaintiff has the option to designate one or more beneficiaries to receive any guaranteed payments due after their death. The beneficiary can be changed at any time prior to death if Independent Life is notified in writing with a notarized signature. If no designation is made, the plaintiff’s estate will receive the guaranteed payments due after death.

FAQ