Prudential Financial

Structured Settlements

A Structured Settlement Annuity provides ongoing periodic payments to the plaintiff or claimant in cases involving physical injury or dispute resolution, preserving tax benefits where applicable.

The Prudential Insurance Company of America wrote its first Structured Settlement contract in 1984. We offer a full product line of immediate and deferred payouts, single and joint life annuities, and medical underwritten annuities. We are a charter member of, and active participant in, the National Structured Settlements Trade Association.

We recognize that the choice of annuity issuer is a critical decision for all parties to a structured settlement. To make this an easier choice, we offer claimants a security interest in the annuity contract, and/or a guarantee1 from The Prudential Insurance Company of America (or from Prudential Financial, Inc.) that payments will be made—as promised.
Why Choose a Structured Settlement?
Qualified structured settlement annuities facilitate settlements of personal injury claims and litigation by adding a dimension of future financial security for the claimant. They can also provide claimants with more money over time than lump-sum settlements.

  • Qualified structured settlements have been used successfully in settling claims arising from personal injury suits, i.e., vehicular accidents, product liability, medical malpractice, and workers' compensation coverage.
  • Future periodic payments are income tax-free to the claimant,2 which makes a Structured Settlement Annuity an attractive alternative to taxable investments.
  • Claimants avoid the risks and fees associated with other types of investments, including the risk of premature dissipation of the funds.
  • At time of settlement, payments are tailored to meet the claimant's individual needs—whether income replacement, lump-sum payments for special equipment, or college funds for dependent children.

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Payment Plans
Structured Settlement Annuities offer a wide variety of payment plans, such as:

  • Designated Period Annuity—payments are guaranteed for a specific amount of time, up to 50 years.
  • Life Annuity—payments are guaranteed during the lifetime of the annuitant.
  • Life Annuity with Designated Period—periodic income is provided for as long as the annuitant lives, with a minimum of guaranteed payments for a designated period, up to 50 years.
  • Lump-Sum Payments—guaranteed lump-sum payments are available to supplement annuity benefits.
  • Life Annuity with Installment Refund—income is provided for as long as the annuitant lives, with a minimum guaranteed payout equal to the purchase price.
  • Joint and Survivor Life Annuity—income payments are provided for the lifetime of two annuitants (e.g., a husband and wife). Upon the death of one annuitant, payments will continue during the lifetime of the survivor at 100% of the original benefit, or at a reduced percentage that you may select.

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Tax Perspectives
Qualified structured settlement annuity payments for personal physical injuries are income tax-free to the recipient. This makes structured settlements an attractive alternative to lump-sum settlements in personal injury suits or agreements.

The tax-exempt status is pursuant to the Internal Revenue Code (IRC) Section 104(a)(2). This provision of the tax law states:
Gross income does not include [...] the amount of any damages (other than punitive damages) received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal physical injuries or physical sickness.
Revenue Ruling 79-220 points out that the recipient of a structured settlement must not have constructive or actual receipt or control over the funds or the annuity contract.

IRC Section 130(c) allows the liability for future periodic payments to be assumed by a third party, i.e., an "assignee," such as PASSCorp (Prudential's assignment company). The funds received for assuming this liability (and purchasing a "qualified funding asset") are excludable from the assignee's gross income, provided that:
  • The assignee assumes the liability from a person (or entity) that is a party to the suit or agreement.
  • The periodic payments are fixed and determinable as to amount and timing.
  • The payments cannot be accelerated, deferred, increased, or decreased by the recipient.
  • The assignee's obligation to make the periodic payments is no greater than that of the party who assigned the liability.
  • The periodic payments are excludable from the gross income of the recipient under IRC Section 104(a)(1) or (2).

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Fee Option for Attorneys
Did you know that plaintiff attorneys can structure their fees on qualified settlements? This can be done regardless of whether the claimant has chosen to structure with Prudential. The benefits to the plaintiff attorney are:
  • Possible deferral of income,
  • Planning for life events (college expenses, retirement, etc.), and 
  • Fixed payments for a specified period.
The payments designated as attorney's fees will be sent directly to the plaintiff attorney on behalf of the plaintiff as scheduled in the settlement documents.

Prudential cannot provide tax advice to you. This information should not be construed as tax advice or legal advice on the structuring of attorney's fees. We suggest that you seek your own tax and legal counsel.

If you would like more information, please contact us .

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Printable Forms (for current Structured Settlement recipients)
If you are currently receiving benefits under a Prudential Structured Settlement contract, and you wish to:
  • Convert your payments from paper check to Electronic Funds Transfer;
  • Record a Change of Address; or
  • Change your Beneficiary (the person who would receive any payments after your death),
please print and complete the appropriate form below (Adobe Acrobat Reader required) and return it to the address stated on the form.

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Printable Forms (for Structured Settlement Brokers)
If you are in the process of structuring a settlement with Prudential, please complete and return the following form:

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Broker Access
Prudential Structured Settlement Annuity Broker Access provides valuable information for the Structured Settlement professional.

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1 Via an assignment of liability to Prudential Assigned Settlement Services Corporation for qualified settlements. Security interest in the annuity contract is not available for attorney fee structures.
2 IRC Section 104(a).