Issue 2 | 1st Quarter 2013 | Back to Main | Contact Us

Keeping things simple is one of the most underutilized financial ideas out there. I had an AIG case that settled in 2007 where the plaintiff was very intelligent, did a lot of his own investing and was very confident in his abilities. When I sat with him and his attorney to go through all of his monthly obligations it was concluded that he needed about $2,500 each month. We put together an annuity that would pay him those expenses until he reached age 70. The balance of the cash he could use for investment. In February 2009, he called to advise me that he lost most of his cash in investments and thanked me for explaining the simple approach of handling his ongoing monthly expenses with the use of structured settlement methodology. It saved his standard of living, and he was doing okay financially as a result.

In a time of record low interest rates, we sometimes allow ourselves to be sucked into an argument of “rates of return” and “portfolio” performance when we present structured settlement illustrations. The fact is that the needs of the plaintiff must be addressed first before the discussion about generating investment income. The question foremost in our mind should be “Where were they prior to the loss, and what was their financial need?”

The bills that a plaintiff had before his/her accident will be there the day after any settlement or verdict, and will continue to come in the future. As structured settlement professionals working with not only the claim professionals, but the insured, defense counsel, plaintiff counsel, and the plaintiffs, I believe we sometimes lose focus on the real issues of the case, namely the plaintiff, and the plaintiff’s family circumstance and current situation.

When you sit down with these individuals and understand their lives have been turned upside down, regardless of the circumstances of the loss, you can see that most of them are lost. Yes, many have delusions of “unimaginable wealth” and think all their life problems have been solved. But in reality, their problems are only beginning if they accept a cash only settlement. Aside from future medical concerns (i.e. life care plans, Medicare Set-Aside), the day-to-day living expenses will always be there. Ask yourself the simple question; what if it was you…., your kids…., a brother or sister or your parents? Practically speaking, we know that a monthly benefit, like a paycheck, will take care of these concerns like utilities, mortgage, insurance (auto, home, and health), college expenses for kids, retirement, even the ability to just buy Christmas gifts, celebrate family birthdays or a small vacation.

“Investment portfolios” do not address the issues many of our plaintiffs’ faces. They are meant to address “investment.” Using structured settlements to handle the day-to-day needs and to make sure these folks can move forward without worry is what we do. Structured settlements and investments should complement each other with no greater emphasis on one more than the other. So the next time people gripe about the interest rates and “return on investment,” ask them the simple questions; how are the plaintiffs paying their monthly bills? Did they have an “investment portfolio” prior to the loss?

The majority of plaintiffs or workers’ compensation claimants that I have met during the course of working on AIG insurance claims and litigation; live simple lives with modest expectations of being able to pay their bills, and improve their family’s life through hard work, smart household spending, and saving for things they desired. That was their American dream, and we can simply continue to build that for them using structured settlement benefits one month at a time. The next time you are confronted with the arguments against structured settlements, ask that person what his/her plan is and how do they propose overcoming the same low interest rates we are all experiencing without risking the very funds needed to last a lifetime.