An actuary uses math and statistics to estimate the financial impact of uncertainty and help clients minimize risk.
An actuary is qualified to evaluate and manage the risks associated with insurance policies, investments, and other potentially hazardous endeavors.
An actuary's employment primarily consists of creating financial models, assessing risk, and utilizing spreadsheets.
It's All About the Numbers
A structured settlement annuity is a contract that results from tort settlements of different kinds of claims and gives a plaintiff periodic compensation. These annuities are used to resolve lawsuits for workers' compensation, medical malpractice, accidents, and other causes that result in physical harm or wrongful death. The term "structured settlement" refers to the fact that the payment streams are often tailored to the needs of the injured party and/or their dependents.
For instance, they can offer consistent income streams to compensate severely damaged plaintiffs for their ongoing medical or care needs, or they can delay payments for up to four years in order to fund college tuition for minors involved in wrongful death lawsuits where a parent passed away. The benefit payments that the plaintiff receives under a structured settlement are not subject to personal income taxation. These agreements are funded by a single premium payment.
FinanciaTypes of Benefit Payments Under a Structured Settlement
Annuity Certain: A stream of predetermined benefit payments provided at regular intervals over a predetermined number of years is known as an annuity certain. These payments are provided to the annuitant's estate or designated beneficiary in the event that the annuitant passes away before the end of the specified time, and they are not contingent on the annuitant's survival.
Lump Sum: One-time payment given at a certain future date; lump sums might be definite or life contingent, meaning they only get paid if the annuitant is still alive at that time. Often, the settlement will specify a number of lump sum payments, for example, payments to be made for a predetermined amount of time every five years.
Single Life Annuity: stream of predetermined benefit payments given to an annuitant at regular intervals throughout the remainder of their lives is known as a single life annuity.
Temporary life Annuity: A stream of defined benefit payments with a predetermined end date that is made at regular intervals only while the annuitant is still living is known as a temporary life annuity.
Pricing Considerations
A structured settlement annuity's price structure needs to take a number of factors into account. It is necessary to make a number of important assumptions, including ones on mortality, interest rates, and spending. Together with profitability targets, the framework needs to account for reserve levels and required capital, which will probably cause a situation known as surplus strain. Lastly, a crucial factor to take into account is the insurer's policy regarding informing the specialist consultants that work in this sector about rate adjustments and guarantee durations.
Other Considerations
ATTORNEY FEES: Attorneys representing plaintiffs in structured settlement actions may ask for their fees to be in the form of an annuity, which is perfectly acceptable in the United States. A couple of important points to note here. First, insurance companies would usually use pricing consistent with their typical retirement annuities since attorneys requesting lifetime incomes would typically be more aligned with that demographic. Next, because these annuities are not structured settlements, they are not covered by IRC 104(a)(2) and would not receive tax free treatment.
INFLATION: The fact that annuity benefits are often fixed at issue and that future benefit payments may lose buying power owing to inflation is a possible drawback of structured settlements. A few product changes have the potential to either directly or indirectly alleviate inflationary issues. The most common are the benefit payments—which were previously covered—that rise at a predetermined rate.
Certain life insurance companies provide rewards that are adjusted for inflation using indexes like the Consumer Price Index. Furthermore, benefit payments under a variable contract called the "Market Indexed" structured settlement are indexed to the performance of equities markets like the S&P 500. With this product, you can be sure of a floor, profit from potential upside income growth based on market performance, and potentially even earn an increasing stream of payments provides the annuitant with a degree of inflation protection.
TAXATION: In accordance with Revenue Ruling 79-220 and Internal Revenue Code (IRC) Section 104(a)(2), structured settlements are exempt from personal income taxes. Any further interest collected would be liable to income tax, even though lump sum awards from personal injury cases would likewise not be taxed. Structures involving bodily harm may be qualifiedly assigned to a third party under IRC Section 130.
FACTORING: The practice of factoring has grown in popularity in the US. It was previously indicated that once a contract is finalized, there is little flexibility available, even if future benefit payments under structured settlement annuities allow the annuity to be customized to match the ongoing needs of the plaintiff/annuitant.
Under the terms of a settled settlement, the plaintiff/annuitants are not permitted to accelerate payments. A plaintiff may occasionally have unexpected needs for cash.
By transferring the rights to all or a portion of the future settlement rewards in exchange for an upfront payment, factoring companies can offer this liquidity. Since this kind of liquidity can come at a high cost, factoring is a contentious practice. Factoring firms usually employ comparatively elevated interest rates to reduce the anticipated future payments, eliciting anxiety that many annuitants don’t have a full appreciation for the time value of money.
Akin Investments, llc will help you in the negotiation of receiving the very best value if you are considering selling your structured settlement and or annuity. In fact, some states require counseling before a court may approve such a sale the seller of the structured settlement should seek "Independent Professional Advice" in order to fully understand the personal and financial impact that such a transaction will have in their life.
As part of Akin investments, llc service you will receive full documentation for the courts review
in the form of personalized valuation and budget calculations. Also you will recieve an "Independent professional Advice" letter ("IPA letter") which may be required in order to obtain the courts approval on the transaction.
Let's Calculate the "Current Value"of your Structured Settlement or Annuity!
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Firm Profile: Akin Investments, llc CRD# 281450
Individuale Profile: Stephen Herbert Akin CRD# 1104380
39 Years in the business
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