Structured Settlements

Financial Comparisons

Select a different option from the menu below to see how it compares to a Structured Settlement:



Structured Settlements versus Education IRAs


Issue / Concern Structured Settlement Education IRAs
What types of securities/insurance products support the payments? A fixed annuity contract issued by a life insurance company. Offers a variety of investment options and rates of return
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. No. This option is designed only as a savings vehicle for qualifying educational expenses.
Is there a guarantee with this option? Yes. The annuity issuer guarantees payments, according to the terms of the structured settlement agreement. No guaranteed return on investments.
What are the costs and fees associated with this option? No additional cost to annuitant. Involves account management and securities management fees.
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. Not predictable since investment returns will depend on market factors.
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. Tax-deferred. Withdrawals are tax-free only if funds are used for qualifying educational expenses.
Is this option affected by market fluctuations? No. Benefit payments are determined and fixed at the time the annuity contract is issued. Yes. Any earnings from principal will be affected by market ups and downs.
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. Subject to annual income and contribution limitations. Cannot be used with other education tax incentives.


Information provided courtesy of The Hartford.


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