4structures® Blog

By John Darer 22 Nov, 2017
What is indexed with Pacific Life ILAPA Rider on a Structured Settlement?
The structured settlement payments are indexed, not the amount funding the indexed linked structured settlement

What index are annuity payment adjustments linked to?
The S&P 500

How are payments adjusted when there are changes in the S&P 500 index?
If there there is a year over year change in the S&P 500 between annual measuring points , then structured settlement payments increase by that percentage, up to a 5% cap.  If there is  a 3% increase in the S&P 500 between the annual measuring points, structured settlement paymnets increase by 3%. If there is a 15% increase in the S&P 500 between the annual measuring points, then payments increase by 5%, which is the cap on increases.  If there is a downward change in the S&P 500 between the annual measuring points then the payments remain at the then current level until the following year and the process continues.

When is the ILAPA Rider best used?
As an allocation on long duration structured settlements for plaintiffs and structured attorney fees.  It is not appropriate for a short duration structure.

Illustrating Pacific LIfe's ILAPA Rider
Given that the performance of an index is not certain the software provided by Pacific Life does not make forward hypothetical projections of how the product might perform for a prospective plaintiff annuitant.  Pacific Life has published an excellent informational brochure .   We have observed others in the structured settlement industry illustrating exemplar fixed percentage returns which are projected out 40,  50, 60 and 70 years. Such illustrations are highly misleading because the index never performs in a straight line. Even if one looks at a long term average for the S&P 500, it's still misleading to illustrate a level fixed COLA to project the performance of a structure with an ILAPA Rider.  One must take into account that in some years the return could be zero because there has been a downward change in the S&P 500 between the two annual measuring points.

Learn more about index linked structured settlements through Resources Provided by LLC
Help With Structured Settlements
John Darer's video introduction to Pacific LIfe's ILAPA rider
Index Linked Structured Settlement Payments Compared to Equity Index Annuity
How Was Pacific Life Indexed Structured Settlement Annuity Affected by Market Crash?

By John Darer 05 Nov, 2017

A Financial Transitionist® is a professional with an established career in the financial services industry *who recognizes the importance and the power of the personal side of money and the unique challenges of transitions. Financial Transitionists® have a rich and comprehensive understanding of how people subjectively experience change, and are able to co-create their highest outcomes with them.  

Financial Transitionists® bring process and tools to their client relationships that are not add-ons. Instead, they are intrinsic to the experience of guiding someone through a transition. Their work is embodied; it’s equal parts what they’re doing and how they’re doing it. And it requires a different kind of listening, a letting go of the seat of authority, and an ability to sit with and through uncertainty. It’s not for the average person and it’s not easy work, but it’s the most rewarding work all of us involved have ever done.

John Darer is one of two settlement experts who have earned the Certified Financial Transitionist designation.

By John Darer 02 Nov, 2017

Independent Life Insurance Company, is a new structured settlement annuity issuer domiciled in Austin, Texas and is exclusively focused on providing annuities for the structured settlement market. As a newly formed and capitalized life insurance company, Independent Life does not have legacy structured settlement annuities on its books with pricing out of alignment with today’s low investment environment, factors which contributed to certain companies leaving the structured settlement marketplace in the last decade.  Independent Life is domiciled in Texas and is led by James D Atkins,  and several industry veterans.

Atkins is the former CEO of Legal & General America. Prior to this position Atkins spent 25 years under the GE Financial Services umbrella (First Colony Life Insurance, GE Financial Assurance, and Genworth). During this time he acted in a variety of capacities including the roles of Chief Actuary and Capital Markets Leader. When he joined First Colony it was new in a fledgling structured settlement niche. During his tenure First Colony became one of the largest writers of structured settlement annuities. At its peak First Colony managed in excess of $10 Billion of Structured Settlement contracts.

Independent Life pledges to provide ongoing financial support through grants that support structured settlement broker and settlement planner initiatives that promote the growth of the industry for the benefit of all stakeholders.

By John Darer 02 Nov, 2017
MetLife will begin offering a domestic non qualified assignment option in early 2018, through its Delaware based MetLife Assignment Company. The funding vehicle will be issued by Metropolitan Tower Life Insurance Company, currently rated A+ by A.M. Best and Aa3 Moodys.  Non qualified assignments (also known as non-qualified  structured settlements are a tax efficient way of settlement of taxable damages.  More details to follow as they  become known. Read about non qualified assignments.
By John Darer 29 Oct, 2017

Many sexual harassment settlements will be taxable, or have taxable elements. After paying attorney fees and applicable federal state and local income taxes, it could leave a third or less to the victim depending on their attorney's contingency fee agreement.  

Sexual Harassment Damages | How to Mitigate the Tax

For those with taxable damages, or with an element of taxable damages a non qualified structured settlement offers significant advantages.

  • Earn interest tax deferred.
  • Earn in interest on the deferred taxes tax deferred.
  • Earn interest on the interest tax deferred.

If personal physical injury is an element of damages and qualifies within the meaning of IRC 104(a)(2), then that portion of the damages will be tax exempt. Please review our taxable equivalent yield chart to see the value of the structured settlement tax benefit.

A structured settlement is  a negotiated stream or streams of period payments in exchange for a release of liability that are customized to meet a particular claimant's needs.  Most structured settlement in sexual harassment or other employment related settlements are funded with a structured settlement annuity or a trust fund that holds United States Treasury obligations.

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