Select a different option from the menu below to see how it compares to a Structured Settlement:
Structured Settlements versus Equity Mutual Funds
|Issue / Concern
|Equity Mutual Funds
|What types of securities/insurance products support the payments?
|A fixed annuity contract issued by a life insurance company.
|An investment company operates the fund, pooling the assets of many investors and investing in equity securities.
|Can this option provide a stable, lifetime income?
|Yes. Payments and distribution schedule are determined up front. Can provide a dependable, predictable income stream that you cannot outlive.
|Historically, equities have shown the greatest potential for long-term growth. But they also entail a higher degree of investment risk, which means they may not be a reliable source for ongoing income needs. Earnings may stop altogether if fund performs poorly.
|Is there a guarantee with this option?
|Yes. The annuity issuer guarantees payments, according to the terms of the structured settlement agreement.
|No. Share prices and returns will fluctuate with investment performance.
|What are the costs and fees associated with this option?
|No additional cost to annuitant.
|Management and expense fees cover the costs of managing the fund and are deducted from returns. Fund may also charge a front- or back-end "load" (i.e., sales charge), redemption fees (paid by investors when they "redeem," or sell shares) and 12b-1 charges.
|Will this option keep pace with inflation?
|A cost-of-living adjustment (COLA) feature is available that can help offset the effects of inflation. This option must be elected when the settlement is designed.
|Designed for long-term growth. Historically, a good choice for keeping up with inflation. Total return will depend on the performance of underlying securities. Past performance is not an indicator of future results.
|What are the tax consequences?
|Income provided by a qualified structured settlement is TAX-FREE, provided the damages received as periodic income (other than punitive damages) are the result of personal physical injuries or physical illness.
|Taxes must be paid as income is earned and distributed. Capital gains or losses from sales of mutual fund shares have additional tax consequences.
|Is this option affected by market fluctuations?
|No. Benefit payments are determined and fixed at the time the annuity contract is issued.
|Fund yield, share price and return will vary, depending on market conditions. You may have a gain or a loss, depending on when you sell your shares.
|Can I make changes to this option after I select it?
|No. The payment amount and schedule are fixed and may not be changed or accelerated.
|Money can be withdrawn or moved from one mutual fund to another. Charges, fees and taxes may apply to each transaction.