How does the financial sector bailouts including those given to financial insurance giants affect the structured settlement industry?

A structured settlement is often set up as a payout vehicle in cases such as injury claim victims. Structured settlements offer the advantages of a tax shelter in many cases versus a heavy taxation rate of lump sum settlement payments. Structured settlements can also be useful where the claim victim and payee are not able to handle the heavy financial responsibilities with handling a large lump sum of money at once. These settlement vehicles can also be used to guarantee payments to minors and children victims. It is also important to understand why concerns about large insurance companies such as AIG are related to structured settlements.

With the current economic environment, and the US government rushing to give bailout money to large banks and companies, there is large amounts of money being given and earmarked to some large insurance companies. Recently, the Federal Reserve Board stated that they are allocating an $85 billion loan to the American International Group (AIG). As a result of this loan, the US government and thus the American taxpayers will become the majority share stakes owners of the company, owning almost 80% of the company.

With respect to just AIG, AIG is one of the largest insurance companies in the US. AIG holds assets of over $1 trillion dollars and has almost 80 million customers and clients around the world. AIG, with its massive insurance dealings and holdings, are a major stakeholder and industry leader in setting up structured settlement annuities. Also, since structured settlements are a vehicle that some clients will opt for with an insurance settlement, there are concerns that future payments of structured settlements may be jeopardized with the bailouts or a possible collapse of the financial sector.

Many insurance companies or their life insurance departments also act as guarantors to a lot of structured settlement plans. With the heavy intertwining of AIG and other large insurance companies with the structured settlement industry, this concern about structured settlements being affect is quite relevant.

It is important to note that in cases of AIG or another insurance company acting as the guarantor of a structured settlement payments and its future structured settlement payments, the insurance company must set aside money place in separate accounts of each of the settlement vehicles. The insurance companies not only sets up these accounts, but the state of Texas which oversees the life insurance department of AIG also provides monitoring and supervision of these accounts on reserve. Lastly, know that these insurance companies cannot remove their assets from their life insurance division to cover other failing divisions; only profits that the companies generate may be moved to other departments.

As a part of the large company stake transfer to the US government, there will invariable be some shifting of some assets and liquidation of some assets. As previously mentioned, for each structured settlement claim that the company guarantees, it has set aside money in separate accounts for each claim. This money cannot and will not be moved as part of any transfer and liquidation of assets; any life annuity will not be the casualty of any company asset re-allocations. Of course be sure to proceed with a cautious optimism about your structured settlement future payments.

Also, know that with the large financial bailout, it appears that these large financial companies will be avoid to remain solvent and avoid company failure and collapse. Should the large insurance company such as AIG fail and have to undergo liquidation of its assets, know that the separate money that are placed in accounts to guarantee each structured settlement may not be moved. There is no necessary need to rush to cash out your future structured settlement payments ; if you do happen to want to sell all or part of your structured settlement, shop around for a trusted and reputable structured settlement company or broker to get you a good deal that you deserve.

Thus, in conclusion, the current waves of financial bailout money given to AIG and other large banks, insurance companies, and financial institutions will not affect any future structured settlement payments or structured settlement financial vehicles.