Structured settlement annuities usually offer an excellent alternative to traditional investments. They are especially attractive when more conventional investments are performing poorly or the risk inherent in such investments is too much to bear.
During the financial crisis of the last ten years the Dow Jones Industrial Average has had a series of drops with little recovery and 90 day T-bills are yielding just over 0.15%. With extreme volatility and almost no return, investors are beginning to wonder what they should now do. Stuffing cash under the mattress or buying blue jeans and canned goods sounds more promising than just about any investment these days. However, for trial attorneys and settlement recipients there exist, with structured settlement annuities, unusual opportunities to achieve a guaranteed, favorable rate of return with little risk.
Throughout the current crisis it is important to note there has not been a single structured settlement annuitant who has not received a scheduled payment. Thus, perhaps the most attractive feature of the structured settlement annuity is the guarantee. Not only do they offer a favorable rate of return, they guarantee the rate for the duration of the annuity contract period; a period which in many cases is the life of the annuitant. These rates can also be scheduled to increase on a regular basis with a cost of living adjustment. Annuitants with this kind of guarantee can sleep much better at night- secure in the knowledge that their money is guaranteed by a highly rated insurance company. All they are required to do is wait until the check arrives. This relieves the burden of stress inherent in investing via traditional means and completely eliminates the question of whether one will run out of money prematurely.
Naturally, you may be wondering how much these guarantees mean in such uncertain times. Well, ironically we can look to American International Group (AIG) for some comfort and assurance. While parent company AIG was hit hard by exposure to toxic assets, underlying insurance companies operating independently of AIG's books remain in good financial position. This is due to heavy state regulation and less risky investment strategies. In fact, subsidiary American Life Insurance Company was just sold to Metlife for an estimated $15 billion. These insurance companies may end up being the saving grace of AIG. It turns out that the life insurance subsidiaries are the crutch upon which AIG's fate rests.
Despite recent turmoil in the financial markets structured settlement annuities remain among the superior settlement planning opportunities for claimants and attorneys alike. In uncertain times a guarantee can be invaluable and decent rates of return tend to be very elusive. With that in mind, never has there been a clearer cut case for these unique tools than now.