Index linked structured settlement annuities have become a recognized option for structured settlement payees, with three insurers currently offering an index linked structured settlement annuity option as of Q3 2025. 

It combines the security of fixed returns with market-linked growth potential.

What is the Cap Rate all about?

• 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.
• The cap rate helps protect the insurer from excessive losses and importantly, provides a level of downside protection for investors. 
• The cap rate is typically expressed as a percentage and is determined by the insurance company offering the annuity. For example,  The Prudential Insurance Company of America offers 1, 3 and 5 year cap rates.  Prudential announced today that the 1 year is 9%, 3 year is 20% and the 5 year cap rate is 75%.  So with a 5 year cap rate the annuitant would enjoy 75% of the gain in the index. the remainder is used as described in the prior bullet point. Bear in mind that a payout rate is applied when it comes time for payments to begin.

How Does the Cap Rate Impact Returns?

• A higher cap rate allows for greater growth potential, while a lower cap rate limits the amount of interest credited, potentially reducing returns. 

Is it possible to "Busta Cap"?

Indeed!  Independent Life Insurance Company is the only structured settlement annuity company at this time with what you might call the "Busta Cap" rate option. with its uncapped structured index linked structured settlement.

Is there more risk? The “risk” is that the index doesn’t reach its potential. With its S&P500 option (with a 10% cap), the crediting is limited to 10% (multiplied by the participation). With the IStructure Classic Franklin Templeton Bank of America World Index (FTBOA) and the Nasdaq12 options, the indexes are uncapped (busted) and then multiplied by the respective participation rates for each index. The FTBOA and Nasdaq12 are low volatility indexes designed for consistent growth and dynamic in that they will adjust with changing market conditions while the S&P is not. While there are similarities, each index is built different and shouldn’t necessarily be compared to one another for returns just as you wouldn’t compare the 0-60 times of a sports car to a sedan to a tractor trailer. Instead, it will depend on which is most appropriate for each client including the possibility of a little in each for diversification, something other index linked products lack at this time.

What Are the Current Index Linked Structured Settlement Options?

Index Life Annuity Payment Adjustment Rider

• Pacific Life Insurance Company
• Pacific Life & Annuity Company (in New York)

Pacific Life offers a single option as rider, but has improvements in the works that should be introduced  late in 2025 or in early 2026.

Income Advantage

• The Prudential Insurance Company of America (all 50 states)

As described above, Prudential's Income Advantage has multiple options, including 1, 3 and 5 tears. Cap rates differ for each, The  1 Year has the lowest Cap rate and the 5 year has the highest

iStructure

• Independent Life Insurance Company (not available in New York)

Offers a variety of options, including two uncapped index option sto what one might colloqualliy refer to as " Busta Cap"

More information About Index Linked Structured Settlement Annuities?

Call  888-325-8640

contact John Darer at 4structures. com LLC