Financial Comparisons
Select a different option from the menu below to see how it compares to a Structured Settlement:
Structured Settlements versus Treasury Securities
| Issue / Concern | Structured Settlement | Treasury Securities |
|---|---|---|
| What types of securities/insurance products support the payments? | A fixed annuity contract issued by a life insurance company. | A debt instrument issued by the US government and sold as securities to investors. |
| 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. | Yes. Available with a wide range of maturities, Treasuries offer predictable income and repayment of principal in full if held to maturity. |
| Is there a guarantee with this option? | Yes. The annuity issuer guarantees payments, according to the terms of the structured settlement agreement. | Considered among the safest of all investments because payment of interest and principal at maturity is guaranteed by the full faith and credit of the US Government. |
| What are the costs and fees associated with this option? | No additional cost to annuitant. | T-bills are issued at a discount from face value. Treasury issues may be purchased directly (the primary market) or via outstanding issues sold prior to maturity by other investors through a broker (the secondary market). If purchased via the secondary market, brokerage fees will apply. |
| 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. | Does not provide a hedge against inflation. |
| 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. | Subject to Federal taxes, but exempt from state and local taxes. |
| Is this option affected by market fluctuations? | No. Benefit payments are determined and fixed at the time the annuity contract is issued. | If Treasuries are held to maturity, investors receive the full face value - regardless of market conditions. If sold prior to maturity, value is subject to market conditions. Investors may receive more or less than they paid, resulting in a potential capital gain or loss. |
| 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. | An active secondary market provides liquidity. There may be a gain or loss if bond is sold or redeemed prior to maturity. |