Are you considering a decision to purchase structured settlement payments to settle your case?
Then you need to read this article to avoid being scammed. Specifically, you have to on guard for unscrupulous tactics by the defense attorneys, the structured settlement annuity company, and your own plaintiff’s lawyer. You also need to determine whether or not your settlement will be large enough to require multiple insurance companies to fund your structured settlement and whether or not the payments will be for a fixed period or for your life expectancy.
Read further to learn how these considerations should affect your decision to buy structured settlement in an effort to settle your case.
Examine Commissions Before You Purchase Structured Settlement Payments
Most people do not realize that structured settlement annuities are very lucrative for insurance companies.
Specifically, these annuities have very large commissions. As such, your lawyer needs to evaluate the size of the commissions and add that to the amount required to settle the case. After all, the party responsible for your injuries should pay the expenses necessary to settle your case. Structured settlement commissions are part of the costs.
But, it does not stop there. You need to make sure that the defense does not overstate the value of the structured settlement annuity offer.
Inflated Values When Negotiating Structured Settlement Purchases
Many inexperienced plaintiff’s attorneys fail to understand how to properly value a structured settlement. Specifically, a common defense tactic is to negotiate a settlement then overstate the value of the structured settlement annuity. As the defense is often an insurance company, the amount necessary to purchase the structured settlement is often much less than the agreed settlement figure.
Furthermore, the “value” fails to take into account various “fees” “commissions” and other kickbacks that will further reduce the cost to the defense to purchase structured settlements.
Plaintiffs should do there own research and compare fees and commissions charged by other companies in order to get a feel for the amount of padding built into the settlement offer. In fact, the plaintiff’s attorney should insist that, as a condition of the settlement, the defendant will pay full value of the settlement. This should include a provision that any fees or commissions be made payable to the plaintiff.
However, insurance defense attorneys aren’t the only ones who need to be watched. Sometimes, plaintiff’s attorneys stand to receive substantial incentives of their own.
Plaintiff’s Attorneys, Self Dealing When You Purchase Structured Settlements
In some cases, the plaintiff’s lawyer may have contacts in the insurance business. If he routinely assists clients when they purchase structured settlements, he must disclose to you that he intends to buy structured settlements from his own business or is receiving a commission from referring you to a certain company that sells structured settlements.
Specifically ask your attorney whether or not he is receiving a commission or referral fee when he refers you to a company that intends to sell structured settlements to you.
Consider Life Expectancy When You Purchase Structured Settlements
It goes without saying that the personal injury victims that typically receive the largest settlements are those who have been badly injured. Naturally, many of these plaintiffs have a significantly shorter life expectancy. As such, it is important to consider life expectancy in your decision to buy structured settlements.
Many structured settlement calculators fail to properly account for specific types of injuries. As such it may be unwise to purchase structured settlements where payments cease on the death of the annuitant. As an alternative, insist that any structured settlement. In these cases, it will make sense to insist upon an annuity that pays a minimum number of payments, or pays a lump sum to the plaintiff’s estate if the annuitant dies within a certain time period. Otherwise, the value of the structured settlement will be lost to the insurance company in the event that the plaintiff dies sooner rather than later.
Use Multiple Companies When You Buy Structured Settlements
Where the settlement is substantial, it often makes sense, in today’s economic climate, to spread the structured settlement among multiple insurance companies. Using this means of diversification when you buy structured settlements can ensure a certain level of protection if the company that sells structured settlements becomes insolvent. In that event, all will not be lost as you will continue to receive the other payments from the other insurance companies. Remember, a company that sells structured settlements loans you their credit. You need to protect yourself from the potential of bankruptcy or insolvency.
Be Vigilant When You Purchase Structured Settlements In A Lawsuit
Now that you know the potential pitfalls to consider when you decide to purchase structured settlements, you can move forward with the decision to settle your case. Be aware of unfair defense tactics, insurance companies and even your own lawyer. If you have a substantial settlement, you may need to consider whether or not to require a minimum number of annuity payments as well as the need to spread the insolvency risk between multiple insurance companies. Keep these factors in mind when you decide to purchase structured settlement payments from an insurance company that wants to sell structured settlements to you.
