Summit Structured Settlements
755 S.E. Frontier Suite 101
Waukee, Iowa 50263
Toll Free: 866.267.1177
Frequently Asked Questions
Q What is a structured settlement?
A: A method of settling a personal/physical injury claim in which the injured party
receives income tax-free payments in the future; typically, in combination with
cash paid at the time of settlement.
Q When should someone consider a structured settlement?
A: Structured settlements can be ideally suited for cases involving the
While there are many reasons a claimant would
want a structure, one of the primary reasons is that the growth of a claimant’s
settlement is considered recovery of personal injury damages, thus excluding
these payments from gross income resulting in no taxes paid. Since the rate of
return of a structure on an after-tax basis is close to the historical rate of
stocks, one gets the investment value of the highest earning investment over the
last eighty years without the risk of other investments. Plus, the claimant can
pre-determine the outcome for the long term. No other investment can make this
- Temporarily or permanently disabled plaintiffs or claimants
- Guardianship cases, including minors or incompetents
- Wrongful death cases where the surviving spouse and/or children need monthly or annual income
- Severe injury, especially with long-term needs for medical care, living
expenses and support of family
Q How is this done?
A: While the insurance company covering the insured could make the future
payments, normally a life insurance annuity is purchased to fund the future
Q What is an annuity?
A: An annuity is an IOU issued by a life insurance company to make future
payments in exchange for immediate cash.
Q What happens to the payments if the claimant dies before the last payments are
A: The payments are made to the person designated by the claimant (claimant’s
beneficiary) at the time of settlement or the claimant’s estate if no person is
chosen. At a later date, the beneficiary designation can be changed or a
beneficiary named, if none has been designated.
Q Why should the claimant structure versus investing in other investments such
as mutual funds?
A: As the past few years have shown, stock and bond markets contain a large
degree of risk. With an investment account funded by stocks and bonds, there is
a statistical likelihood of the account running out with regular withdrawals
while structures can be set-up never to be exhausted. If the claimant has the
risk tolerance and discipline to invest in the market, a structure can provide a
means of feeding money into the market to mitigate the risk of investing at an
Q What if the claimant has a sudden emergency and needs cash?
A: In any form of investment, one sacrifices immediate access to funds
(liquidity) for rate of return. Thus, one may decide to take structure payments
sooner realizing, like any investment, the rate of return will not be as high.
Additionally, the claimant has the option of taking more in cash, provided they
have the discipline to preserve the funds for an emergency versus other needs
and wants. The reality is that it is easy to use irreplaceable settlement funds
to solve life’s difficulties at the expense of exhausting these monies that will
be needed later in life.