Prudential Income Advantage Upgraded!
John Darer • January 25, 2024
Prudential announced a change to the death during deferral period option for Income Advantage, its Indexed Structured Settlement Annuity
What’s changing?
According to a January 25, 2024 release by Prudential Insurance Company of America:
- Effective immediately, if a claimant (or attorney structuring their fee) dies during the deferral period, any interest will continue to be credited during the deferral period. Payments will then be made, as they become due, to the designated beneficiary(ies). This will be the new default option.
- Alternatively, the claimant may elect at the time of settlement (at no additional cost) to commute the accumulation amount (the total of the premium plus any index-linked growth).** If elected, and the claimant dies during the deferral period, the beneficiary(ies) will receive a designated percentage (as set forth in the Annuity Certificate) of the accumulation amount in a lump sum; provided that such amount will not be less than the minimum amount under applicable law. Previously, this was the only option available.
Good heads up play by Prudential!
What’s not changing?
The death during payout options and all other Prudential structured settlement annuity products.
** If commutation is elected, and the claimant then dies during the deferral period, and the death occurred relatively close in time to the date of sale, it is possible that the lump sum payable to the beneficiary(ies) could be an amount that is less than the premium amount paid for the annuity.
Prudential Insurance Company of America, founded in 1875, with its home office in Newark, New Jersey, is one of America's oldest insurance companies.
Still Work to Be Done Industry Wide
There is still work to be done, in my opinion to move to an adoption of second generation responsive commutation riders. I have authored several articles about the need for responsive structured settlement payment riders on my Structured Settlement Watchdog blog.
Structured Settlement Commutation Riders Must Be Revisited Before Estate Tax Cuts Expire in 2025 - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews (typepad.com)
The cap rate on index linked structured settlement annuities is a limit set by the insurance company on the maximum interest rate that can be credited to the annuity based on the performance of the underlying index that also helps provide the downside prtection..
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USAA Life Insurance Company, an A++ rated insurance company, issues structured settlement annuities with 1%, 2% and 3% COLAs. USAA Life structured settlements are exceptionally compatitive on lifetime benefit payments with long duration certain periods for ages under 35.
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A qualified assignment is part of the process to establish a structured settlement that enables a Defendant, Insurer, or Qualified Settlement Fund, to achieve a complete novation of the future periodic payment claim established by suit or agreement, through a substitution of obligors.
An annuity and a structured settlement walked into a bar, how do you tell them apart? 4structures' John Darer reviews the differences for you right here.
A lifetime structured settlement annuity turns part of your settlement recovery into guaranteed income you can’t outlive that is contractually guaranteed by a regulated life insurance company. A lifetime annuity is sometimes referred to as longevity insurance.
Structured settlement annuities can be very helpful to the budgeting process by providing guaranteed income streams and deferred lump sum payments tailored to specific budget needs and time frames identified in the settlement planning process.
Structured settlement receivables are often deceptfully marketed to investors as annuities. When the originating structured settlement factoring company buys structured settlement payments in a structured settlement factoring transaction, they are buying a receivable not an annuity.
Avoid constructive receipt if a structured settllement or structured attorney fee is to be established. Care must be taken to avoid constructive receipt.
