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Tax-Free Income with Competitive Returns: Why Your Clients Need to Consider Structured Settlements

Tax-Free Income with Competitive Returns:  Why Your Clients Need to Consider Structured Settlements
Sage Settlement Consulting

Structured settlement critics often advise taking lump sum cash settlements and investing the funds in the open market. While the stock market has historically averaged over 10%, many investors struggle to achieve the same result. Structured settlements provide a competitive solution, with benefits that a lump sum cash settlement can’t match.

Investing the Lump Sum Cash Settlement: Assumptions

Let’s say your client decides to take the lump sum cash option and invest it. The stock market’s 10% average annual return assumes that:

1) your client has received adequate investing advice;

2) your client follows through with the investing advice; and

3) your client leaves the money in the investments for the long term, allowing the money to grow while riding the waves of the stock market.

In reality, many people choose poor investments or pull their money out at the wrong time, effectively decimating their portfolios.

The Non-Monetary Part of the Equation

The other key element to remember is the emotional implications of injury settlements. A settlement is often the largest single sum of money an individual will ever receive. The shock of suddenly handling a large sum of money, combined with the emotional ramifications of a life-altering injury and a potential lack of financial acumen, leaves an injured claimant vulnerable to financial disaster.

Focus on Stability—With a Competitive Return

A structured settlement annuity can provide a stable foundation for your client’s future. Here’s how:

  • Income tax exemption: Structured settlement payments—including growth—are 100% income tax-free. While lump sum cash settlements are income tax-free for physical injury cases, if the money is placed in a traditional investment, then any growth is subject to income taxes.
  • Guaranteed1 rate of return: A locked-in rate of return frees your client from worrying about market volatility.
  • No overhead fees: Unlike traditional investments, structured settlement annuities do not have any management fees. That means more money in your client’s pocket over time—and with the guaranteed rate of return, a highly competitive, yet safe financial vehicle.

For claimants who do want to participate in the stock market actively, structured settlement plans can also incorporate market-based options. Market-based structured settlements offer additional growth opportunities and can be managed by the claimant’s financial advisor.

Contact the structured settlement experts today

Sage Settlement Consulting’s team is the national leader in structured settlement annuities. For more information, contact our experienced consultants today.

1 Guarantees are subject to the claims-paying abilities of the issuing insurance company.

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