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Old 07-30-2017, 03:31 PM   #1
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Personal Injury Structured Settlement Personal Injury Structured Settlement
I don't know if an annuity is a good idea for a settlement my wife and I received. It is for a personal injury case. Our financial advisor is recommending annuities. She seems very nice but I am worried she is pushing us that direction because she will make more vs if we went with mutual funds or something else. Our goals are one to have our money safe from say a lawsuit or anything else. Two, have a steady monthly income. Three, maximize that income. Four, pay little to no taxes. What are some other options that may work for us?
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Old 07-30-2017, 04:19 PM   #2
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Personal Injury Structured Settlement Re: Personal Injury Structured Settlement
An annuity CAN be a good part of a financial plan. But imo, its not THE plan, just a piece of the plan. From what you describe it sounds like at least some of your $ would likely be a good fit for an annuity. What type, amount, etc... there are alot of factors that go into figuring out what is the best solution for your individual situation.

IMO, if any adviser is recommending the bulk of your $ be into an annuity, there's a chance its a commission play. Protection from creditors, etc also has moving part and can vary state to state. As an adviser, I would need to know alot more to be able to give any advice that would even be close to being accurate for you.
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Old 07-30-2017, 05:28 PM   #3
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Personal Injury Structured Settlement Re: Personal Injury Structured Settlement
If it's good enough for Shaq...

Shaq on Annuities

Shaquille O
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Old 07-30-2017, 05:42 PM   #4
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Personal Injury Structured Settlement Re: Personal Injury Structured Settlement Billyboy74 is the thread starter for: Personal Injury Structured Settlement

Thank you for the info. I imagine having more specifics would be helpful. We are looking to put about half of the settlement into the annuity and the advisor is not pushing at all for more. As far as protection goes, from what I have read , an annuity for an injury settlement in California is a good way to go to protect yourself from some random person suing you. As well as from creditors.
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Old 07-30-2017, 06:29 PM   #5
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Personal Injury Structured Settlement Re: Personal Injury Structured Settlement
Originally Posted by Billyboy74 View Post
I don't know if an annuity is a good idea for a settlement my wife and I received. It is for a personal injury case. Our financial advisor is recommending annuities.
Of course she is. Annuities pay very high commissions. A friend of mine got into bed with a financial advisor several years ago. The advisor gets 1% of his money ($3000) per year, has lost my friend a great deal of money and just apologizes, and last year sold him an annuity (for a big commission) that made him nothing last year.

Originally Posted by Billyboy74 View Post
Our goals are one to have our money safe from say a lawsuit or anything else. Two, have a steady monthly income. Three, maximize that income. Four, pay little to no taxes. What are some other options that may work for us?
1 - Stay away from annuities.
2 - Dump the financial advisor.
3 - Put your money in CDs. Ladder them (short, medium, longer term).
4 - If you don't like the small returns buy AAA rated tax free municipal bonds, (also short, medium, longer term).
5 - If you want to take bigger risks, mutual funds are riskier and follow the ups and downs of the stock market (which can make you tear your hair out when the market is down). Avoid funds with front end loads. Go with no-load funds which means you don't buy them through a regular broker/financial advisor because commissions small, although you can get the same results with Exchange Traded Funds (ETF) which are bought and sold like stocks and you can invest in them through Ameritrade, Scottrade, Etrade (and the other online low commission brokers) where commissions are extremely low.

Most importantly, educate yourself thoroughly about investment opportunities. It's not rocket science. Don't be led around by the nose by a financial advisor (like my friend has done). It could cost you big time.

PS: Your money will never be safe from a lawsuit so don't do anything for which you can be sued, and buy high limit auto and homeowners liability limits and you shouldn't have that to worry about. And to avoid creditors suing you, make sure you pay your bills as soon as they come do and don't abuse credit.
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Old 07-30-2017, 06:43 PM   #6
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Personal Injury Structured Settlement Re: Personal Injury Structured Settlement
AdjusterJack,

Since you previously didn't know what a life insurance illustration was... I don't think you're qualified to be giving financial advice on ANY topic on this forum - regardless of the experience of others.

And I'm not going to take the time to outline the differences between fee-based asset management vs fixed indexed annuities to someone who already has their mind made up and trying to pose as giving advice.


As far as CREDITOR PROTECTION is concerned... it is a STATE-BY-STATE issue.
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This is the resource I reference regarding state-by-state creditor protections for life insurance and annuities. It's rather comprehensive.

http://summitalliance.net/wp-content...-Insurance.pdf

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Originally Posted by adjusterjack View Post
Of course she is. Annuities pay very high commissions. A friend of mine got into bed with a financial advisor several years ago. The advisor gets 1% of his money ($3000) per year, has lost my friend a great deal of money and just apologizes, and last year sold him an annuity (for a big commission) that made him nothing last year.



1 - Stay away from annuities.
2 - Dump the financial advisor.
3 - Put your money in CDs. Ladder them (short, medium, longer term).
4 - If you don't like the small returns buy AAA rated tax free municipal bonds,
(also short, medium, longer term).
5 - If you want to take bigger risks, mutual funds are riskier and follow the ups and downs of the stock market (which can make you tear your hair out when the market is down). Avoid funds with front end loads. Go with no-load funds which means you don't buy them through a regular broker/financial advisor because commissions small, although you can get the same results with Exchange Traded Funds (ETF) which are bought and sold like stocks and you can invest in them through Ameritrade, Scottrade, Etrade (and the other online low commission brokers) where commissions are extremely low.

Most importantly, educate yourself thoroughly about investment opportunities. It's not rocket science. Don't be led around by the nose by a financial advisor (like my friend has done). It could cost you big time.

PS: Your money will never be safe from a lawsuit so don't do anything for which you can be sued, and buy high limit auto and homeowners liability limits and you shouldn't have that to worry about. And to avoid creditors suing you, make sure you pay your bills as soon as they come do and don't abuse credit.
It's also not rocket science to figure out that this is the ANNUITIES forum where people ask questions about... ANNUITIES.

Don't go giving advice where you are clearly not qualified to do so.
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Old 07-30-2017, 06:52 PM   #7
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Personal Injury Structured Settlement Re: Personal Injury Structured Settlement Billyboy74 is the thread starter for: Personal Injury Structured Settlement

Thank you all for your input. It's very helpful.
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Old 07-30-2017, 07:16 PM   #8
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Personal Injury Structured Settlement Re: Personal Injury Structured Settlement
Originally Posted by DHK View Post

Don't go giving advice where you are clearly not qualified to do so.
I'm as qualified as anybody to give financial advice to consumers as I have reached the age of 70 with about $400,000 in retirement funds, a house with no mortgage since 1998, cars with no car payments since 2004, an 800 credit score and no debts.

Yes, I do know what forum I've posted in. The consumer is entitled to all sides of the story.

I'm sure you can overcome my comments with your expertise in financial matters.
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Old 07-30-2017, 08:34 PM   #9
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Personal Injury Structured Settlement Re: Personal Injury Structured Settlement
You are not a licensed professional skilled in giving advice, regardless of your personal situation.

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Originally Posted by Billyboy74 View Post
I don't know if an annuity is a good idea for a settlement my wife and I received. It is for a personal injury case. Our financial advisor is recommending annuities. She seems very nice but I am worried she is pushing us that direction because she will make more vs if we went with mutual funds or something else.

Our goals are
1) to have our money safe from say a lawsuit or anything else.
2) have a steady monthly income.
3) maximize that income.
4) pay little to no taxes.

What are some other options that may work for us?
If that's what you're looking for, then an annuity is EXACTLY what you should have. Probably a series of annuities from different companies. Why? Because due to TAMRA laws enacted in 1988, if you put ALL your money in the same company in annuities in the same year, then a distribution from ONE will be calculated for tax purposes as a distribution from ALL of them.

1988 – TAMRA
The Technical and Miscellaneous Reform Act of 1988 (TAMRA) had yet another change for annuities. Congress found that instead of buying, say, one annuity contract for $100,000, individuals were buying ten $10,000 contracts. They would then take distributions from one contract, the amounts of which exceeded interest earnings credited to the one contract. This meant that these distributions would be deemed a return of principal and only partially taxed. Congress considered this to be abusive. Therefore, they instituted what has become known as the “aggregation rule.” This rule states that all annuities purchased within one calendar year will be aggregated and treated as one contract for the purposes of determining taxation of withdrawals. The effective date of this requirement was October 22, 1988. Annuities purchased prior to that time are grandfathered from this provision.
http://www.annuityadvisors.com/refer...tion?refid=135
1) I already posted the reference I use regarding creditor protection and it is EXEMPT for annuities sold in California (meaning it doesn't exist).

2) A steady monthly income is available FOR LIFE with annuities. No other financial product guarantees this. However, the amount is primarily based on your age. The older you are, the higher the % payout would be from your annuity.

3) To Maximize the income potential, there are many ways. Some are lifetime income benefit riders, and some are just laddering annuity surrender charges. It primarily depends on your age and when you plan to draw out income.

4) Annuities that are "annuitized" are those that are paying out a lifetime income and have an exclusion ratio in the payments. Basically, a small amount of the growth of the annuity is included in taxable income and the rest is considered a return of principal... until your basis in your contract has been paid out, then it's all taxable.

In the meantime, you can enjoy tax-deferred growth of your annuities. If you don't annuitize, but take out withdrawals, then your interest growth comes out first (LIFO or Last In First Out).


Now, in reference to the notion that one annuity sold had zero growth: That's a function of fixed indexed annuities. These annuities are sold as fixed annuities because they are not invested directly in the stock market, but have interest credited based on the MOVEMENT of a given stock market index. (The insurance company does this by buying stock options and exercising them.)
- If at the end of one year, if the index moved 20% up, you get interest credited based on that growth, subject to a cap rate (because of the costs of index options).
- If the index didn't move, then you could have 0% credited.
- If the index lost, then you still have 0% credited because the annuity is not directly invested in the stock market index.

The value in this strategy is in the market rebound... when you have 100% of your balance that can participate in the upside, rather than having lost 30-50% and trying to recapture investment balances from that point - even with full market participation.

I hope that helps.
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Last edited by DHK; 07-31-2017 at 10:40 AM.
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Old 07-30-2017, 10:12 PM   #10
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Personal Injury Structured Settlement Re: Personal Injury Structured Settlement
Originally Posted by adjusterjack View Post
I'm as qualified as anybody to give financial advice to consumers as I have reached the age of 70 with about $400,000 in retirement funds, a house with no mortgage since 1998, cars with no car payments since 2004, an 800 credit score and no debts.

Yes, I do know what forum I've posted in. The consumer is entitled to all sides of the story.

I'm sure you can overcome my comments with your expertise in financial matters.
Hey, PLease post that you are not licensed clearly in your answer. A house with no mortgage generally means you are clueless about how US tax system works. I am sorry to hear you paid off your mortgage. As for your credit score and correlation of giving professional financial advice, well congratulations on having a higher score than Warren Buffet or Donald Trump. They will call you soon.

As for your advice on AAA tax exempt bonds. Excellent. Since this client is from state of CA, I am sure you will disclose what would happen if something like Orange County declaring bankruptcy or Pacific Gas and Electric bankruptcy. In extreme cases, an annuity will almost always outperform any of your suggestions. By the way, how much AMT did you pay on your TAX FREE bonds last year. Income tax free does not mean completely tax free. Almost every client I have that has municipals, pays the AMT.


Since this client is mentioning asset protection, annuities can be a good choice. I would also look at using trusts, adding umbrella insurance coverage, and may be shifting assets.
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