The Role of Structured Settlements Brokers – What Do They Do?

by Sean Bryant on March 4, 2014

A structured settlement is a kind of annuity or a fixed sum of money decided to be paid to someone every year, possibly for the rest of his life or could also be arranged in monthly installments along with the annual arrangement. They are awarded as a compensation for personal injuries or legal settlements. Also the workers’ settlement claims and lottery winnings fall in the bracket of settlements that the concerned company may provide as a part of their structured settlements to the recipients.

The much required division of the settlements into an annuity

Before 1982, these structured settlements were only given in a lump sum amounts up front to the plaintiffs who won their cases against the defendant insurance companies, but with a new Act passed by the Congress- the Periodic Payment Settlement Act, these payments can now be divided into monthly and annual amounts which the plaintiff decides upon. This money is also exempt from all federal, state and local income taxes and is therefore completely tax free. The legal incentive attached with the settlements makes it more profitable for the wronged person. This amount he/she gains could be used to pay his medical bills or other payments that he may have incurred in the cases of car accidents and other mishaps. There was other pressing need to have the settlements awarded in installments- the large amount of money received by the person was seldom tackled well and was actually almost never managed skillfully by them. Also, in the case of minors, it was observed that the people who are guardians of the minor used the money irresponsibly before the minor can be old enough to gain from it.

The imperative role of the brokers’ in such settlements

The person awarded in such scenario could be people who are uninformed about the legal proceedings about the settlement. Here the role of the broker’s comes in handy. The brokers interpret the settlement clauses well for the lay man and help him gain his full payment from the insurance companies. In some instances you may even seek the advice of the brokers before consenting on the terms and conditions of the settlement. This is of great importance because once the agreement is locked it cannot be changed at all. The person can then wisely plan his payment amounts- monthly or annual and mould it in a way best suited to him. Alex from Cashfuturepayments.com has studied the role of brokers thoroughly, and suggests that the brokers can help protect the rights of the concerned person so that not only does he receive the full amount in time in whichever way he desires but also he receives the amount without any hassles because the insurance companies cannot use excuses of financial distress to keep the money pending. These payments are not subjective to the state of economy in general and are totally guaranteed.

Other ways in which the broker can help the people receiving the settlements

In the unfortunate cases where there has been a death of the person at the receiving end the money keeps getting awarded to the beneficiaries designated by the person and the brokers appointed need to make sure that there is no difficulty for the person to get the money. It could be for the education of the children that the person has left behind or for the sustenance of his family in general. The tax-free payments should continue to be enjoyed by the person who has been awarded the settlement. As a con of these periodic payments, there may come a time when there is a need for some lump sum payment which may not be included in the terms and conditions of the agreement. In cases such as these, it is often seen that people opt to sell their structured settlements to arrange for the huge amount that they so desperately need. The brokers can help you get good rates for these buyouts.

The prime job of the brokers

Hence in all cases of structured settlements whether it is a car accident or a wrongful death or be it a workers’ compensation, you can get a free quote from the brokers and they will help you access the money without any hassles as quickly as possible. They are responsible for advising and guiding you in the process and are prompt with their services to protect your rights in this regard. They are well versed with the laws regarding these structured settlements like the Federal and State laws which may differ from state to state as approved by the Congress or the Protection Act which makes sure that the families of the recipients receive full counseling and advice before selling their structured settlements. At the core of this entire legal affair is the Periodic Payment Act signed by President Ronald Reagan which has been codified in the Internal Revenue Service Code and has been made to promote the use of the structured settlements to provide for the financial security of the families of the victims. The benefits are thus long term and beneficial because the annuities are tax-free. This way the person who is the recipient of these structured settlements can ensure and safeguard the future of his family and will not feel at a disadvantage in the times of peril. Timely payments as scheduled will reach his household and he can continue to sustain his family despite being crippled from an accident or any other misfortune.

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Sean Bryant

Sean Bryant created OneSmartDollar.com in 2011 to help pass along his knowledge of finance and economics to others. After graduating from the University of Iowa with a degree in economics he worked as a construction superintendent before jumping into the world of finance. Sean has worked on the trade desk for a commodities brokerage firm, he was a project manager for an investment research company and was a CDO analyst at a big bank. That being said he brings a good understanding of the finance field to the One Smart Dollar community. When not working Sean and he wife are avid world travelers. He enjoys spending time with his daughter Colette and dog Charlie.

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