Reducing Default Risk

The only major risk an injury victim takes when entering into a structured settlement is the solvency of the company selected to provide the future periodic payments. However, this is a relatively small risk given the financial size of the major life insurance companies that provide structured settlement annuities. Nevertheless, when a “substantial” structured settlement is done one must always consider split funding the structured settlement with multiple companies to spread out the risk. The premium can be spread out amongst as many different companies as the client would like. However, if the case involves a rated age it may be detrimental to the client to split fund. This issue must be examined on a case by case basis.

In addition, when a structured settlement is done secured creditor status can be requested. This is accomplished by doing a special kind of assignment document called a Uniform Qualified Assignment Release and Pledge Agreement. This gives the injury victim secured creditor status which means in the event of the insolvency of a life insurance company they would stand in line only behind the government as a creditor. It moves them to the front of the line.