Many of us have heard of the term structured annuity settlement. Structured settlements can be very complex to understand and very difficult to explain.
Structured settlements, also called annuities, come in many different shapes and sizes. Unfortunately when we think about structured settlements it is usually because something unexpected comes up such as a medial illness or a serious accident. A structured settlement is simply an agreement in which a claimant is made periodic payments because of a personal injury claim. Today I wanted to talk about a few of the options that you have when it comes to choosing the best type of annuity contract for yourself. There are several different kinds of annuity payments, which include variable annuity and also immediate annuity.
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A variable annuity is a contract between yourself and an insurance company in which the insurer agrees to send payments to you periodically for the rest of your life. If, god forbid, you pass away the payments can g to your surviving spouse. Variable annuities can either start immediately or can be set up to start at a future date. Variable Annuities have two phases, which is the accumulation phase, and the payout phase. Phase one allows you to make purchase payments that are allocated to a number of different investment options. During phase two you will start to receive the money you put into the annuity plus any gains as regular lump sum payment.
Immediate annuities, which are also called income or payout annuities, are a set up a little differently than a traditional annuity. Some annuities give you the option of being immediate annuities, which forgoes the accumulations phase meaning that you receive annuity payments as soon as you sign up for them. Instead of paying into your annuity over a period of time and then receiving lump sum payments periodically immediate annuities allow you to put in one large lump sum upfront and receive payments regularly until you die. The great thing about immediate annuities is that you can specify how long you would like the payout to be for of it can continue until you and your spouse pass on.
Structured Settlements are a great way to take care of yourself and your family in case you are temporarily unable to take care of them. Before signing up for an annuity it is best to check and see what the best contract options for you would be. Since a structured settlement is meant financial security, it is extremely important to get the credentials of the annuity provider. It is also best if you get the legal advice of a lawyer and financial planner to make sure you understand all the legal terms and conditions of the annuity contract.
