Equity-backed structured settlements fluctuate based on market activity. While these are slightly riskier settlements than fixed annuities, the payout can be larger.
How Does an Equity-Backed Structured Settlement Work?
Market-based structured settlements are available with the ability to customize payout options without life insurance company annuity contingencies. While a specific payment stream can be decided upon, a luxury exists to draw upon the monies at any time, whereas typical fixed annuities cannot be altered. A payment stream must be implemented, as this still represents a structured settlement; however, if a payee decides to take an additional disbursement or change their payment schedule, these accommodations can typically be made. Market-based, equity-backed structured settlements can offer various types of payouts even besides lump-sums, such as monthly or annual payouts. These types of settlements are a bit riskier, as they are based on market activity and may fluctuate but have the potential for larger-than-expected payouts in excess of 6, 7, or even 8 percent interest earnings. There are three different types of equity-backed structures that can be chosen.
With the monthly payout scenario, the plaintiff will be provided with monthly payments containing a portion of their settlement money. The amount of these monthly payouts is predetermined before any of the monies are disbursed to the plaintiff. These payouts will continue for a given amount of time, depending on other factors decided prior to the first payment.
With annual payouts, the plaintiff will be provided with one lump-sum payout per year. The amount of years this continues is predetermined before the first payout is provided to the plaintiff.
Each quarter, meaning four times a year, the plaintiff receives a payout. This payout continues for a given amount of time, determined prior to the start of payments. This plan is a common choice given that the money is based on the market and the market operates in quarters.