We hear a lot of reasons of why the injured person should not tie up money for the future. The most common excuse is that more money can be made with a stockbroker or on their own because interest rates are too low. The answer to this is straight forward and simple.
Any positive guaranteed rate of return, no matter how boring it may seem, has an absolute place in everybody’s financial plan.
The amount of any positive interest rate of return is acceptable and SUITABLE for most injured people when the alternative is any squandering of the settlement let alone spending it all. Minimal risk is most suitable while more risky investments that may earn a higher return or even lose money are not suitable for most injured people.
If you are comfortable with risking your entire settlement, we are not the right fit for you.
The original specific settlement planning tool is the structured settlement annuity which came into being in the late 1970’s. This tool was incredibly successful for two main reasons:
1) Simplicity because everyone could understand the terms: We will pay you this much more money overtime for some of your settlement dollars today.
2) You could not change the deal.
It was simple protection to prevent the claimant from rapidly spending all of the settlement. Tens of thousands of these annuities have been placed in settlements.
Today, the second reason above has been unraveled by a questionable industry that preys on injured people receiving annuity payments. This is similar to pay day lenders - you suffer a substantial penalty to get your check before it is due. The new federal agency, Consumer Financial Protection Bureau (CFPB), has pay day lenders in their sights and it shouldn’t be long before they target the companies buying your future annuity checks at huge discounts.
Take Action: For those of you inclined to write your Congress person or Senator, please do so, asking them to request the CFPB investigate these structured settlement annuity check buying company’s practices.
Meanwhile, the settlement planning tool of the future is still the structured settlement annuity for the disciplined individual or a no frills Asset Protection Settlement Trust combined with an annuity for those individuals not so disciplined. What is the goal? Preserve and protect settlement dollars while earning the most secure rates of return.