Best Life Quote

Life Insurance with a Structured Settlement

girl thinking about life insurance

Written By Doug Mitchell

Doug Mitchell, CLU holds a BA degree in Finance from Auburn University as well as having obtained a Chartered Life Underwriter (CLU) designation from The American College in Bryn Mahr, PA.  Doug has spent close to 30 years in the insurance and financial planning industry and has held licenses to sell securities, long-term care insurance, health.  Doug is also a financial blogger addressing the topics of life insurance, annuities and retirement income planning.

Holly Mitchell  &

Holly Mitchell’s background in life insurance insurance goes back to 1985 when she worked for her father who was a New York Life agent. Holly has a marketing degree from Auburn University and has had a life insurance license since 2008. In addition to advising life insurance for customers all around the country, Holly is our website fact checker.

Rob Pinner   &

Rob Pinner is the founder and CEO of Pinner Financial Services servicing all 50 states. Rob started his insurance career in 2002.

Louis LaBash

Results-driven and innovative life insurance professional with 30 plus years of life insurance industry sales and marketing experience. Recognized as a pioneer in the field, leveraging phone and internet channels to exceed personal sales of over $100 million during the first decade of the 21st century. Creator of a highly effective intuitive IUL life insurance sales software that facilitated the sale of millions of dollars of indexed universal policies by numerous life insurance agents. Proven track record as a Managing General Agent (MGA), Life Agent, IUL Life Insurance Sales Software developer, and leading-edge creator of insurance marketing tools, educational content, and delivery systems.

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One of the biggest questions that people often have about life insurance is how it relates to other kinds of financial vehicles and financial planning. Structured settlements are one popular topic of discussion.

Structured settlements can be a real lifesaver for a family. They’re not very prominent types of assets, and some people don’t even know what a structured settlement is.

What Is a Structured Settlement?

Essentially, structured settlements are a legal settlement or court award for some kind of litigated case, usually involving some type of harm or injury. They call it a structured settlement because it pays out over time. Like an annuity or a government disability payment, a structured settlement means someone will be cutting checks to the recipient on a monthly basis.

I Have a Structured Settlement – Do I Need Life Insurance?

When you’re looking through your structured settlement and trying to decide on a life insurance plan, you might end up with your head spinning.

We are here to stop the spinning and give you the perfect coverage.

This article is going to explore the relationship between structure settlement and life insurance.

How Structured Settlements Work

Part of the idea about structured settlements is that courts feel like it’s better to dole out settlement money over a number of years, to help a household pay the bills.

The idea is that if you get a lump sum settlement, you may spend it too soon. There may be certain tax implications, or a number of different things can happen with that money. Then you’re back to square one. There are aspects built into federal and state law to protect families from these kinds of dangers. Planners want to make sure that those who receive settlements are able to use them over time to stay afloat financially. That means building a structure that will come in when bills come in so that the head of the household can manage finances.

Why Do I Need Life Insurance with a Structured Settlement?

So if you’re already getting money every month, why pay a premium for a life insurance policy?

One reason is that, as mentioned above, the structured settlement is not a lump sum. Life insurance payouts are often in one lump sum, and they help cover all kinds of things, from funeral expenses to lost wages. That makes them a unique vehicle for making sure beneficiaries are well taken care of after someone passes on.

Another big reason is that life insurance payouts are taxed differently than other kinds of payouts. Structured settlement recipients or any other settlement recipients will often find that the IRS is taxing their proceeds as windfall income. By contrast, life insurance payouts, in many cases, are not taxed when they are sent to the beneficiary. The government makes exceptions for life insurance because these agencies realize that life insurance isn’t like other kinds of capital gains — it’s not gambling or a strategy to line someone’s pockets. It’s a very fundamental way of protecting families in tragic situations.

In some cases, a structured settlement might not be large enough to pay for all of the expenses and bills your family will have to pay. You need to ensure your family will have the funds they need, even if something were to happen.

Before you rely on your structured settlement (which you should never do), you need to know how much money your family needs. Add up the bills and debts. You’ll quickly see the need for a quality insurance plan.

Life Insurance for Structured Settlement Buyout

If you’ve watched day-time TV, you’ve heard commercials for structured settlement buyouts. There are companies which will give you a lump sum for the structured settlement. The commercials are targeted towards people with these settlements who need one lump sum.

Instead of having to wait for the payments, they can get all the cash at once. We aren’t going to get into the wisdom of using these buyouts, but if you decide to do it, the company is going to require you to have a life insurance plan. Why do they care if you have insurance? Because it protects them.

If you use their services, the company is going to receive your monthly payments, while they pay you a lesser sum. If you passed away, the company wouldn’t get the monthly payments any longer. Before the company will give you the lump sum, they will require a life insurance plan for the total of the settlement with the company being the beneficiary of the policy.

Some settlement buyout companies have insurance agents to expedite the process. Be careful of buying an insurance plan through these agents, they may try and sell you an expensive plan. Always do some comparison shopping around before you buy.

Life Insurance Vs. Structured Settlement

At Best Life Quote, we want your family to have all the protection they need. We’ve spent years in the insurance market, and we’ve heard way too many stories about loved ones who didn’t have the coverage they needed.

If you’re looking for a life insurance plan, regardless of a structured settlement. We’re a group of independent insurance agents who aren’t restricted to one single company.

The benefit of working with an independent insurance brokerage (like us) is the ability to compare a bunch of companies and plans at once. With some basic info, we will be able to give you a bunch of quotes and plans at once.

All we need from you is your age, your state, if you use tobacco, and how much coverage you want. After this, we will bring all of the quotes and plans straight to you.

Not only can we help you do the shopping, but we can also advise you towards the best plan to meet your needs.

As insurance experts, we’ve helped just about every kind of client through all types of situations. When it comes to life insurance, we’ve seen it all.

Structured Settlements & Life Insurance: What You Need to Know

So the bottom line is, even if you have a structured settlement sending monthly checks to help cover groceries, rent or other expenses, life insurance is still a practical and reasonable way of preparing financial safeguards for a household.

Use a professional insurance broker to scour the market for the best coverage and the best policies for your family. You’ll find that in many cases, you can get the low-premium policy that you need, to be prepared without spending a lot of your paycheck or other income on a monthly basis. A broker will help make the paperwork and application process smooth and minimize your time and headaches in getting a policy in place.

Instead of waiting on hold for hours and hours with each company, give us one call. We promise we won’t leave you on hold forever.

Call us today for a quote at 1-800-712-8519.

Picture of Doug Mitchell, CLU

Doug Mitchell, CLU

Doug Mitchell, CLU holds a BA degree in Finance from Auburn University as well as having obtained a Chartered Life Underwriter (CLU) designation from The American College in Bryn Mahr, PA. Doug has spent close to 30 years in the life insurance and financial planning industry and has held licenses to sell securities, long-term care insurance, health. Some other notable items about Doug: Top of the Table Million Dollar Round Table member (MDRT). (MDRT is a global, independent association of the world’s leading life insurance advisors) | Premier Partner with Lincoln Financial and Cabinet Member | Served two years as President of the Auburn/Opelika Association of Financial Advisors | Life Millionaire status at Horace Mann Insurance Company and was awarded the Life Agent of the Year Award | New York Life, Executive Council Member | Currently serves as President of Ogletree Financial, a life insurance General Agency. | Doug is also a financial blogger addressing the topics of life insurance, annuities and retirement income planning.

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