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Structured Settlement Interest Rates
Structured Settlement Interest Rates are a key element in pricing structured-settlements, structured-sales, secured installment sales of real-estate or businesses, and non-qualified structures utilized for non-qualified assignments. Life-Insurance Companies distribute book-rates, which are subject to the changing market conditions.
The available rates vary between the carriers according to the companies issuing annuities, and their investments, surplus position, reserve statutory-guidelines, and their accepted business model, including if there is a “rated-age” and other considerations. The most competitive rates will be discovered by the structured-settlement brokers.
Structured Settlement Interest Rates Vary On A Daily Basis
Most carriers issue daily structured-settlement rate pricing, The book-rates are set taking into consideration the massive flow of money, and must meet the strict statutory-guidelines in use by many states, which require the matching of assets to liabilities. Book Rates can be the starting point. Many brokers will deal direct with the issuer of the annuity to attempt to get a better rate than the book-rate.
In an environment of declining interest rates, this is not an easy task. Sometimes the spot rates in the bond-market will provide a better daily rate of pricing. Depending on the issuer of the structured-settlement annuity, the minimum premium for a structured-settlement daily-rate-pricing will range from “None” to $2M. Most of these daily-rates are only good until the end of the next business-day, but some can be extended for up to 10 days.
Some carriers will consider an extension when a case is ongoing. If the annuity-premium is going to be over $3M, is can be easier to get an even longer extension. When negotiating disputed issues of damages, the use of daily-rate pricing can make a big difference. When the Defendant has limited coverage, and no assets, they can be used to enhance the policy value limits offer.
The Meaning Of “Rated Age”
Negative medical reports can sometimes be used to your advantage. The life-expectancy of the Plaintiff is important when figuring out the cost of a structured-settlement. This is true where the payments are due over the life of the Plaintiff, or even if the payment is a “life-contingent” lump-sum that is deferred. The extent of the injuries, sex, and age, all affect the cost of the annuity.
Sometimes the quote on the annuity is based as if the rated-age is the Plaintiff’s actual age. If the underwriter at the life-insurance company thinks that the Plaintiff may not live a normal lifetime, they might be inclined to risk giving the lifetime income-flow at a lower annuity-premium cost.
This risk that the life-insurance company assumes can be a significant benefit to a Plaintiff with a lifetime of medical needs, or the need for an income-stream that will last a lifetime.
Structured Settlement Interest Rates are very involved and complicated, and this is exactly why I always recommend the guidance of a firm like Einstein Structured Settlements. Contact us today for a free quote and revisionary interest information.