What exactly are structured settlements, how safe are they, how long have they been around, and can I benefit by adding them to my portfolio?
Those are great questions, so let’s get started:
What Are Structured Settlements?
Structured Settlements are simply payment obligations by large, highly rated insurance companies.
Most of these payments are currently being made to accident victims who find a need for cash now and would like to give up their payments in order to receive a lump sum today.
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Here are some examples:
John Hancock- Paying $100,000 on 7/01/2015 which can be purchased today for $90,000
Yield equates to 4%
Met Life- Paying $1000/month starting 11/01/2013 until 11/01/2019 or a total of $72,000 which can be purchased today for $62,000. Yield equates to 5%.
New York Life- Paying $250/month starting 3/15/2015 and ending 3/15/2025. Total payments equal $30,000 and can be purchased today for $21,000. Yield equates to 6%.
An investor simply chooses the structured settlement(s) that fits his/her situation. Each settlement is guaranteed by a highly rated insurance company with insurance protection from $250,000 per settlement in most cases. The insurance protection may be higher depending on each states insurance levels.
Once the court system approves the sale of these structured settlements, they are they made available for you to purchase at discounts from 4-7%.
Many investors purchase structured settlements inside their IRA, as an additional investment for their “Fixed” investments, to supplement income, to transfer wealth to beneficiaries, or to simply obtain a higher safe yield.
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How Safe Are They?
Since all structured settlements we obtain for our clients are backed by large, highly rated insurance companies, here is the final conclusion of a report written about how safe they are:
There are many more safety features that will provide you with the comfort level you are looking for even if you are the most conservative investor, just download our free report:
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How Long Have Structured Settlements Been Around?
Structured Settlements have been around for over 2 decades, however institutions have been buying all of them until recently. Now individual retail investors just like you can purchase these safe alternatives just like the banks and financial institutions have been.
Can You Benefit From Investing In Structured Settlements?
Now that you have a better understanding of how structured settlements work, let’s take a look
at how you can utilize them in your portfolio:
Click here: How To Use Them In Your Portfolio
How To Use Structured Settlements In Your Portfolio
There are various uses for structured settlements some of which are described below:
FOR IRA’s”
Let’s assume Mary is 55 yrs old and wants to protect her retirement account from stock market risk, but also would like a competitive yield. She would like her income to start when she is age 65 and continue for 10 years until her other investments can grow to provide more income.
Mary purchases a structured settlement for $50,000 today inside of her IRA. The structured settlement is payable by Prudential Life Insurance Company and grows for 10 years and they starts to pay out
$1000/month for 10 years. Mary’s total payout is $120,000 which she purchased for only $50,000 today on a fixed guaranteed basis.
For Short Term Fixed Rate:
John would simply like to obtain a better yield for the next few years until the economy picks up.
John purchases a structured settlement for $75,000 which pays a lump sum of $95,000 3 years later from Allstate. John’s 3 year yield is 4% on a fixed, safe, guaranteed, insured investment. What rate are you getting on your fixed rates today for 3 years?
For Transferring Money To Beneficiaries:
Bill and Susan are 84 and 81 respectively and have $50,000 they know they just want to keep safe for their grandchildren. They also do not want to leave a monthly income as opposed to a lump sum so the money lasts longer. Bill and Susan purchase a $50,000 structured settlement from State Farm that starts paying $1000/month starting 8 years from now. Bill and Susan purchased this structured settlement inside of their revocable trust as payments will continue whether they are alive or not.
For Income:
James and Sally are age 73 and would like to increase their fixed yields which have drastically declined on their investments over the last several years. James and Sally purchase 2 structured settlements.
The first structured settlement starts paying immediately from now until 10 years from now in the amount of $1000/month. The total payout is $120,000. James and Sally purchased this for $90,000 today. James and Sally also purchased a second structured settlement that starts paying in 10 years and continues to pay for 15 years or until they are age 98! James and Sally now enjoy a yield of 5.5% on their income when they were only getting 2% previously.
Take a look at our list of structured settlements that are available now:
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