2025 Guide "Independent Professional Advice on Selling Annuities & Structured Settlements"
Annuities
An Annuity is an insurance policy that functions similarly to an investment. Annuities provide a safeguard against unfavorable outcomes for your finances, such as a significant loss in the event of a stock market meltdown. You purchase an annuity that ensures a consistent monthly income for decades or perhaps a lifetime, as opposed to handling your money yourself and taking on the risks associated with stocks and mutual funds.
Annuities are agreements made between insurers and investors that are intended to help investors reach their long-term retirement objectives.
There are different types of annuities, such as:
Fixed Annuities. Returns are based on a fixed interest rate that you agree to when you purchase the annuity. The insurance company will also make regular payments of a certain amount on each dollar your invested.
Indexed Annuities. These base your payouts on the performance of a financial index like the S&P 500 with the stipulation that you will never receive less than a minimum payment amount each month. If the index performs strongly, your return could be greater than the investment, but if it’s weak, you will never receive less than the specified amount.
Variable Annuities. These use investments such as mutual funds to determine your return. The rate of return on your investment, and the amount of periodic payments you receive, depends on the performance of the funds you choose. Variable annuities typically pay a death benefit to someone you designate. That person can receive all the money remaining in the account or an agreed upon guaranteed minimum.
Structured Settlements
Structured settlements are associated with annuities since they are seen as a successful method for providing funds to individuals who require financial assistance but also benefit from the discipline of scheduled monthly or yearly payments. In 1982, Congress enacted the Periodic Payment Settlement Tax Act, which created structured settlements to offer long-term financial stability to victims of accidents and their families.
The concept was to substitute one-time payments given to personal injury claimants with regular payments. The government's goal was to reduce the number of personal injury compensation recipients who exhausted their funds rapidly and were then compelled to depend on public aid. Besides personal-injury claimants, structured settlements are often arranged for individuals who secure substantial liability and damage awards, for lottery winners, and for attorneys and law firms owed significant fees.
Due to their ability to provide scheduled payments, principal guarantees, and investment returns, and because insurance companies were already providing them, annuities rapidly emerged as the favored option for executing structured settlements. To promote their usage, the new legislation rendered any interest or capital gains generated from the annuity in a structured settlement tax free.
Structured Settlement Act
The Structured Settlement Act of 2002 defines the qualification for this role as professionals working as certified public accountants, actuaries or licensed professional advisors.
Their expertise enables them to consider the pros and cons of a major financial decision and to provide you with a written recommendation. Structured settlement recipients pursuing the sale of payments can meet with an IPA and receive a recommendation in favor of or in opposition to selling payments.
The cost will depend on which type of professional you turn to and their rates. Consultations (which include formal documents) can range from $500 to $1,500. Some buyers will reimburse sellers for this cost, but will not directly choose and pay for the IPA as this could result in a conflict of interest. Federal law prohibits the IPA from being affiliated with or employed by the settlement buying company. This protects the seller and ensures advice is impartial.
Sellers then bring the recommendation to court—if the letter endorses the transfer—when attending the required hearing that is part of the selling process. A judge considers the IPA’s recommendation as a factor in deciding whether or not to give approval.
On May 16, 2023 South Carolina Governor Henry McMasters signed the new law.
Session 125 - (2023-2024)
General Bill, By Rankin, Young, Hutto, Sabb and Malloy Summary: Structured Settlement Payments
AN ACT TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY AMENDING SECTION 15-50-20, RELATING TO DEFINITIONS FOR PURPOSES OF THE STRUCTURED SETTLEMENT PROTECTION ACT, SO AS TO PROVIDE ADDITIONAL DEFINITIONS; BY ADDING SECTION 15-50-25 SO AS TO PROVIDE A LIST OF ACTS IN WHICH A STRUCTURED SETTLEMENT PURCHASE COMPANY CANNOT ENGAGE; BY AMENDING SECTION 15-50-30, RELATING TO DISCLOSURE STATEMENTS, SO AS TO ADD TO THE LIST OF ITEMS WHICH MUST BE DISCLOSED TO THE PAYEE BY THE STRUCTURED SETTLEMENT PURCHASE COMPANY; BY AMENDING SECTION 15-50-40, RELATING TO APPROVAL BY FINAL COURT ORDER, SO AS TO ADD FACTORS WHICH THE COURT MUST CONSIDER IN DETERMINING IF THE TRANSFER OF THE STRUCTURED SETTLEMENT PAYMENT RIGHTS IS IN THE BEST INTEREST OF THE PAYEE;
BY AMENDING SECTION 15-50-50, RELATING TO RIGHTS AND OBLIGATIONS OF A STRUCTURED SETTLEMENT OBLIGOR, ANNUITY ISSUER, AND TRANSFEREE, SO AS TO PROVIDE WHEN CERTAIN PARTIES WILL BE DISCHARGED FROM LIABILITY; BY AMENDING SECTION 15-50-60, RELATING TO THE NOTICE OF AN APPROVAL HEARING, SO AS TO PROVIDE THAT A HEARING MUST BE HELD IN THE CIRCUIT COURT IN A COUNTY IN WHICH THE PAYEE RESIDES, A HEARING MUST BE HELD IN THE COUNTY IN WHICH THE AGREEMENT WAS APPROVED IF THE PAYEE IS A NONRESIDENT OF THE STATE, AND FURTHER REQUIRE THAT THE PAYEE MUST ATTEND THE HEARING IN PERSON UNLESS GOOD CAUSE EXISTS TO EXCUSE THE IN-PERSON ATTENDANCE; BY AMENDING SECTION 15-50-70, RELATING TO THE SCOPE OF TRANSFER AGREEMENTS, SO AS TO MAKE CONFORMING CHANGES; BY ADDING SECTION 15-50-80 SO AS TO PROVIDE THAT THE COURT MAY APPOINT AN ATTORNEY TO SERVE AS A GUARDIAN AD LITEM TO ADVISE THE COURT IN CERTAIN CASES; BY ADDING SECTION 15-50-90 SO AS TO PROVIDE THAT A STRUCTURED SETTLEMENT PURCHASE COMPANY WHO WANTS TO DO BUSINESS IN THIS STATE MUST REGISTER WITH THE SECRETARY OF STATE; BY ADDING SECTION 15-50-100 SO AS TO PROVIDE THAT REGISTRATION IS VALID FOR ONE YEAR AND A RENEWED APPLICATION MUST BE FILED EVERY YEAR THEREAFTER; BY ADDING SECTION 15-50-110 SO AS TO PROVIDE THAT A STRUCTURED SETTLEMENT PURCHASE COMPANY MUST POST A BOND WITH THE SECRETARY OF STATE OR PAY A CASH BOND IN THE AMOUNT OF FIFTY THOUSAND DOLLARS; BY ADDING SECTION 15-50-120 SO AS TO PROVIDE THAT A STRUCTURED SETTLEMENT PURCHASE COMPANY MUST FILE A NOTICE OF JUDGMENT WITH THE SECRETARY OF STATE AND PROVIDE A COPY OF THE JUDGMENT SECURED AGAINST THE COMPANY; BY ADDING SECTION 15-50-130 SO AS TO PROVIDE THAT LIABILITY IS NOT AFFECTED BY A BREACH OF CONTRACT, BREACH OF WARRANTY, OR ANY OTHER ACT OR OMISSION OF THE BONDED STRUCTURED SETTLEMENT PURCHASE COMPANY; BY ADDING SECTION 15-50-140 SO AS TO PROVIDE THAT THE SECRETARY OF STATE MUST RECEIVE WRITTEN NOTICE OF THE CANCELLATION OR MODIFICATION OF A SURETY BOND WITHIN TWENTY DAYS PRIOR TO THE CANCELLATION OR MODIFICATION; BY ADDING SECTION 15-50-150 SO AS TO PROVIDE THAT AN ASSIGNEE IS NOT REQUIRED TO REGISTER AS A STRUCTURED SETTLEMENT PURCHASE COMPANY TO ACQUIRE STRUCTURED SETTLEMENT PAYMENT RIGHTS; BY ADDING SECTION 15-50-160 SO AS TO PROVIDE THAT THE SECRETARY OF STATE MAY ASSESS AN ADMINISTRATIVE FINE IF A PERSON WHO IS REQUIRED TO REGISTER DOES NOT DO SO WITHIN FIFTEEN DAYS AFTER RECEIPT OF NOTICE TO REGISTER; AND BY ADDING SECTION 15-50-170 SO AS TO PROVIDE THAT A TRANSFER ORDER DOES NOT CONSTITUTE A QUALIFIED ORDER PURSUANT TO FEDERAL LAW IF THE TRANSFEREE IS NOT REGISTERED AS A STRUCTURED SETTLEMENT PURCHASE COMPANY PURSUANT TO THIS ACT AT THE TIME THE ORDER IS SIGNED.
Download the Complete Amendment:
Your attorney and structured settlements professional invested time, effort and expertise in creating your individual settlement plan, so we recommend that any decision you’re considering to sell the payments be carefully and seriously considered. Often, it’s just better for your situation to keep your payments rather than sell them.
While the original settlement was set up with your future needs in mind, times change. So, you may be faced with the need to adapt to unexpected events in your life. That’s when selling part or all of your structured settlement may be a good option so you can get cash for structured settlement payments.
States Requiring Independent Professional Advice For The Sale of Structured Settlement Payments
Alaska | California | Delaware |
Louisiana | Maine | Minnesota |
Missouri | Maryland | North Carolina |
Ohio |
Remember to check your states current requirements as more and more states have modified the statutes
2025 Structured Settlement Annuity Issuers Telephone
American General Life insurance Company | 800-288-4088 |
Berkshire Hathaway Life Insurance Company | 402-916-3100 |
Independent Life Insurance Company | 800-793-0848 |
Metropolitian Life Insurance Company, Metropolotian Tower Life | 800-638-2704 |
New York Life Insurance Company | 855-469-5772 |
Pacific Life insurance Company, Pacific Life Annuity Company | 888-728-5611 |
Prudential Insurance Company of America | 877-778-8118 |
United of Omaha Life Insurance Company | 800-843-2455 |
USAA Life Insurance Company | 800-531-8722 |
Please reach out and we will provide contact information for Former Structured Settlement Annuity Issuers.
Your Next Move
5 Easy Steps
Step 1
Understand Your Structured Settlement.
Gather all of your documentation. Understand the terms. Contact the issuer with any questions that you, the potential buyer or financial advisor may have. Details matter.
Step 2
Check your States Requirements for the sale.
Are you required to get written verification of seeking advice? An Independent Professional Advice Letter is documentation for the court to verify that you have discussed and reviewed the details of the transaction with an independent financial advisor.
Step 3
Now its time to Start searching for a buyer also known as a Factoring Company. They can be found via an internet search. It is advisable to consult with a Financial Advisor or an Attorney you trust. Check reviews and the company’s BBB rating. Create a list of at least two or three potential purchasers.
Get quotes as they are more likely to give you their best rate straight away. Ask for their effective discount rate (this includes all associated fees) and aim for the lowest value.
Potential Buyers and Factoring Companies
American Equity Funding | 800-874-2389 | |
Annuity Payment Freedom | 877-547-3672 | |
Black Square Financial | 866-356-5165 | |
CBC Funding | 866-748-4781 | |
DRB Capital | 855-582-9975 | |
Fairfield Funding | 888-943-8637 | |
Fast Annuity Settlement T. | 855-898-3278 | |
Fortune Settlement | 833-736-7886 | |
J.G. Wentworth | 833-594-3400 | |
Liberty Settlement Funding | 855-643-0333 | |
Lion Grace | 833-295-5565 | |
Peachtree Financial | 833-364-1754 | |
Rising Capital | 866-444-5061 | |
Stone Stree Capital | 866-416-5118 | |
Structured Settlement Capital | 800-400-9123 |
Please note the above table is provided as information only and not a recommendation for any company.
Step 4
An Informed Decision.
After doing all of your research, gathering documents and understanding your structured settlement. It is time to decide on the purchaser that you want to do business with. Be aware that some companies in the business may be agressive in their sales techniques. Do not be pushed by them. Do not be rushed. Take your time, talk with your financial advisor and concered family members.
Step 5
Final Review
The process may take time, often a couple months to clear. A court hearing via a local attorney appointed by the buyer or yourself. You will need to attend in person and a judge will assess whether the sale is in your best interest. They will look at your personal circumstances, the buyer’s reputation, the discount rate and any previous payments that have been made. If he or she approves the sale, the transfer of funds can take place.
Glossary
A few definitions to help you understand the secondary market for structured settlements.
Structured settlement
An arrangement that settles a lawsuit or workers’ compensation claim by letting the defendant pay the plaintiff money in installments over a period of time. They often are used in personal injury, product liability, and wrongful death claims. The person receiving the payments (also called the payee) benefits from a set payment income stream. The party making the payments knows in advance how much it will have to pay. Structured settlements encourage and enhance lawsuit settlements, which is sound public policy. Structured settlement payments that are part of a settlement reached in a physical injury or wrongful death case are not taxed as income by the IRS.
Primary market
The industry that creates structured settlements. This includes insurance companies and settlement brokers. The parties in a lawsuit can decide that it would be appropriate to end the case with a structured settlement. Either the plaintiff or defendant (or both) may choose to hire a broker who will look for an appropriate annuity from an insurance company to fund the settlement. The brokers and the insurance company are all part of the primary structured settlement industry. Tax laws do not allow the parties to a structured settlement to increase, decrease, speed up, or delay the payments. This led to the development of the Secondary Market.
Secondary market
The industry that purchases structured settlement payment streams. Members of the Secondary Market buy all or part of a structured settlement from the payee (the person entitled to receive payments). This gives payees more financial flexibility and control over their financial assets. The payee assigns the right to receive future payments to a funding company. In return, the funding company pays the payee the discounted present value of the future payments. The amount of this payment is calculated using a discount rate. State and federal laws require all structured settlement sales in the Secondary Market (both literally and practically) to be reviewed by a judge.
Discount rates
The rate used to convert future receipts or payments to their present value. It typically ranges from 9% to 18%, depending on many factors, including how far in the future the payments will be paid, the costs incurred by the funding company that is purchasing the payments, the creditworthiness of the insurance company making the payments, whether the payments are guaranteed or life contingent, and other factors.
Excise tax
This is a tax that funding companies must pay if they go ahead with a structured settlement transfer without getting court approval or if they violate state or federal law regulating the transfer of structured settlement payments. This penalty serves to keep the Secondary Market accountable and transparent.
Funding company
A firm that buys future payment rights from payees at a discount and pays the seller/payee a lump sum in return for future periodic payments. Examples of payments bought by funding companies include lottery winnings, structured settlements, and personal annuities.
Monte Carlo Simulation
An analytical technique for solving a problem by performing a large number of trial runs, called simulations, and inferring a solution from the collective results of the trial runs. Method for calculating the probability distribution of possible outcomes.
Model State Structured Settlement Protection Act
A model law that establishes procedures for the transfer of future structured settlement payments. More than 49 states have enacted state structured settlement transfer statutes. Generally the statutes require disclosures to be provided to the payee before a contract to transfer can be signed by the payee and and court approval of all structured settlement transfers, although specifics vary from state to state, in 2001 by the National Conference of Insurance Legislators and supported the reenactment|updates to same since 2001.
Payee
An individual who receives tax-free payments under a structured settlement.
Transfer
Any sale or pledge by a payee of his or her rights to future structured settlement payments in exchange for money or other consideration.
Transferee
The company or person who acquires structured settlement payment rights through a transfer or sale.
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liquidating an annuity or structured settlement.
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