Last month, we published a post titled, “Are structured settlement annuities irrelevant?” In it, we introduced the idea that fixed guaranteed structured settlement annuities may not always be the best choice for plaintiffs who are looking for lifetime security. In today’s market, their yield is often much lower than other professionally managed periodic payment obligation setups. But are there exceptions that give families some participation in growth?
The industry is always working on adapting to the ebbs and flows of the market. As a result, there are a variety of innovative solutions that give annuitants the potential to see a higher yield, making their asset a better investment. Riders and other products out there create the potential for additional growth, which helps close the yield gap in what annuitants would otherwise miss out on.
One such option is Pacific Life’s Index-Linked Annuity Payment Adjustment (ILAPA). This rider offers the potential for increased payment amounts for a structured settlement while preserving the current benefit level. While the ILAPA is not an investment — it isn’t a security and does not participate directly in the stock market — it creates the opportunity for a person’s structured settlement annuity payments to increase based on positive S&P 500® index returns. By adding ILAPA to a structured settlement contract issue, changes to the payment amount have the potential to increase. When the S&P 500 has a negative or zero return, there is no reduction to the payment amount. This annuity is an exception to the rule as it provides the strength of guarantee of an A+ AM Best carrier, and it gives a family some participation in growth.
With the many planning options out there, and the ever-evolving tools available from key players in the industry, a plaintiff’s settlement team has a lot to explore when determining the best option to provide lifelong security.
A West Point graduate where he served as captain and military aviator, John Bair continues his commitment to our country through his efforts within the settlement planning industry. He has represented families of victims lost in the Flight 3407 crash, offered pro bono services to the families of 9/11 victims and drafted the first consumer protection bill for plaintiffs (H.R. 3699).