For the risk averse or risk sensitive,  by choice or necessity, this is a great time to be thinking about allocating structured settlements to your settlement plans as a respite from market volatility.

Short term structured settlements and short-term components of a structured settlement payment plan are great options for risk averse plaintiffs or lawyers as structured settlement yields for all durations continue to rise. It may be well worth putting short term structured settlements on your radar as they are rising the fastest, and use short term structured settlements to your advantage for many different applications and types of cases.  Even 6 month US Treasury Bills now exceed 4.6%

Yields in Excess of 5% are possible on intermediate and long term cash flows.  On November 1, 2022 I locked in a 10 year certain plan with a 5.7% return  What does 5.7% tax-free mean?

Taxable Equivalent Yields at Different  Hypothetical Tax Rates

15%        6.705%

18%        6.951%

28%        7.916%

31%        8.261%

33%        8.507%

40%        9.500%

50%      11.400%

See expanded taxable equivalent yield chart

By comparison:

 What are T bills/ T Notes/T Bonds Paying today?

1 month 3.691%

3 month 4.173%

6 month 4.619%

1 year     4.804%

2 year     4.723%%

3 year     4.649%

5 year     4.372%

7 year     4.277%

10 year   4.158%

20 year   4.47%

30 year  4.194%

Sources:  CNBC  Treasury Bonds November 3, 2022 @8:46pm EDT

What about investing in the Stock Market?

If you missed the 20 biggest trading days in the S&P 500 from January3, 2002 to December 31, 2021 you would have averaged 2.6%. If you missed the 30 biggest trading days the averag would onl have been 0.43%, according to the J.P. Morgan Asset Mnaagement 2022 Retirement GUide published March 3, 2022 p 44. Read Structured Settlement Rate of Return Compared to Alternative Investments (4structures.com) for more details.

Super Short Term

It is possible with certain companies to eke out a positive return for really short durations of as little as a few months, assuming a $1,000,000 premium (inclusive of assignment fees), where payments qualify as damages under IRC 104(a) or 104(a)(2); and eke out a positive rate of return on non-qualified assignment cases for a duration of as little as 9-11 months.  Independent Life's duration-based compensation model makes them very competitive on a super short term market segmentation.    Independent Life structured settlement annuities are not available in New York.  United States Life Insurance Company in the City of New York, a Corebridge Financial Company  (formerly AIG LIfe & Retirement) is also strong in this area.

Where should short term structured settlements be on your radar?

• Structured settlements for minors in the mid-teens where payments are needed beginning within a few years and total duration from funding is less than 10 years.
• Structured settlements for older plaintiffs who want stable income, but don't want to effectively pay a "longevity premium" to cover lifetime risk.
• Attorneys who wish to defer their legal fees for under 10 years or want to spread their fees over 10 years or less from settlement funding using a conservative strategy.
• Plaintiffs or attorneys who don't want to invest a big lump sum all at once can allocate to a short-term structured settlement payment stream to fund dollar cost averaging into a long-term investment program.  Dollar cost averaging is an investment strategy that aims to apply value investing principles to systematic regular investment. The term was first coined by Warren Buffet's mentor Benjamin Graham in his 1949 book The Intelligent Investor.
• Attorneys who want to use attorney fee deferrals to fund a quick pay whole life policy.
• Attorneys who want to use attorney fee deferrals to fund defined benefit qualified plan contributions
• Structured installment sale, where the seller wants cash flows for 10 years or less. The shorter period may also be more palatable to buyers to mitigate concerns related to contingent liability.
• Commercial lease disputes
• Intellectual property disputes
• Trademark and Copyright disputes
• Employment cases where the plaintiff is interested in a short-term payment stream of under 10 years.

Structured fixed term structured settlements can be funded with:

• Fixed structured settlements
  
• United States Treasury Funded Structured Settlements
• Interest Rated Linked Structured Settlements (IRLSS), Could be used as a "caboose" to a short-term structured settlement. With IRLSS you essentially buy a lump sum at a predetermined time in the future (say 5 years). If the 10-year treasury is higher in 5 years than it was when the policy was established, the lump sum converts to income stream for a predetermined periodic of time, say 10 or 15 years.  Click on the link above for more details and/or call us at 888-325-8640 if you would like to discuss further or would like to see a quote.
• Index Linked Structured Settlements.  There are Capped and Uncapped oppportunities in this area. Can also be used as a " caboose". Please note that the uncapped version is not currently available in the State of New York.

* Illustration based on funding October 18, 2022, with first payment date of October 18, 2024, with quarterly payments over the stated payment period. Rates may be different over different durations and modes of payment and are subject to change.  Read more about structured settlement quotes.

Last updated November 3, 2022