Structured Settlement Annuity

Structured Settlement Annuity (SSA) is associated with payment for injury or damage. It is a popular way of making payments because it is tax-free and can be spread in any intervals. The buyer has flexibility to decide when to make payments and in what intervals. In this case, the one receiving compensation is not worried because the transaction agreement is legally binding.

It is a preferred means on both sides in sudden body injury or death where another party was accidentally involved. Before making payment or buying a structured settlement annuity, one has to acknowledge participation in activities that led to the damage.

Product design

Design of this payment method varies widely. The amount can range from as little as $100000 to billions of payment. The structure of payment and periods also vary depending on ability of the buyer and willingness to clear the payment. Numerous firms offer relating consulting services on the same where they not only offer the money for making such huge payments but also help in facilitation of the process.

The design phase also involves negotiation. Of course, there are legal bindings and limits to the negotiations. Still, the one receiving payment has to come to an agreement on specific terms of payment. First, the two parties with help of a consultant have to agree on the total amount. Most importantly, they have to agree on intervals or how the payment will be spread.

Emergence of Structured Settlement Annuity (SSA)

Structured Settlement Annuity (SSA) became popular in the early 80s. This was after the US Congress introduced and passed Periodic Payment Settlement Act. Business firms are often involved in lawsuits; in most cases, the defendant will lose and have to pay. Law courts give the two parties an option of settling the issues on their own, in a favorable manner to each. If the lawsuit involves small amount of money, small in this case is relative, the company at fault will have to pay at once. However, huge amounts are usually paid through annuity. The complainant has to agree first.

Difference between an annuity and a structured settlement

The two are similar on payment basis but there is a huge difference in features. Both are used to make payments to a person. It might be money owed or regular payment but in this case huge sums of money that can only be extended in batches over a given period. Structured settlement and annuities are on the rise in the 21st century; it is important to note the differences to use either of them appropriately.


Annuities are bought from investment firms. If there is need to make payment in specific intervals whether for lottery or injury, an investment firm offers the services. In this case, you buy the annuity and instruct the firm to make payments at given intervals to a certain party. This is only after you agree with the other party on payment intervals and amount to be sent in batches. Annuity is commonly used in payment of lottery winners to regulate their expenditures. Spreading the amount at given intervals as agreed controls spending behavior.

Some consider annuities as an investment. Yes, it can offer attractive returns on investment but can also lead to huge loses; it is wise to research on annuity restructures of a firm before channeling in your funds.

Structured settlement

Structured settlement is primarily for paying damage or injury to another party. It might be from a lawsuit in the corporate world or between individuals on body injury and death. This is a firm of compensation where the one at fault will have to buy annuities and make payments in given intervals.

Unlike annuities, structured settlements are more flexible. The periods can be adjusted in whichever way that suits the person making compensation. Annuities are of multiple types but are regulated by structures. For instance, a retirement annuity is only paid after an individual gets to a certain age. With structured settlements, the firm extending the service offers you a chance to customize the payment period to suit individual needs.

Structured settlement buyer

After issuance of structured settlement, you are free to sell it to an investment firm or a life insurance company in exchange for lump sum or other benefits including annuities. Of course, you won’t receive the whole amount because the one buying is benefiting from the transaction. Also, you have to be extra careful when any company approaches to buy structured settlement. You might lose everything.

Selling a structured settlement means you transfer the benefits of period payments to another party. The buyer takes over all rights and benefits attached to the structured settlement.

A buyer is also referred to as factoring company. Most payments are upfront in lump sum. The payment mode is tax-free just like the structured in period payments. It is designed to help in recovery of damages hence no benefit from the party on receiving end.

Is it a good idea?

If you are filing a civil suit or issue within a corporate setting involving billions, this would be the best way to seek compensation. It is a guaranteed form of payment because the one at fault is bound by legal procedures. Also, installment payments helps with planning your finances unlike when it comes as lump sum.