Structured Settlements

Structured Settlement Mutual Funds - Advantages And Disadvantages?

When you are trying to decide on what is best, a structured settlement or equity mutual funds, you should take a look at the issues and concerns of both aspects first. There are advantages and disadvantaged to structured settlement mutual funds. If you take time to compare the difference of these two options, it can help define what is best for your financial situation and long term financial security.

With a structured settlement, a fixed annuity contract is issued by a life insurance company. The assets are invested in the insurance company's general account of the party involved. With structured settlement mutual funds, an investment company is in charge of the fund and puts the assets of many investors into equity securities.

With structured settlements, the payments and distribution are scheduled up front. This can provide a steady source of dependable and predictable income for the rest of your life. On the other hand, structured settlement mutual funds have shown the best potential for long term growth. The drawback with structured settlement mutual funds, is that they have a higher investment risk. Your income can stop, if the mutual funds does not perform well.

With a structured settlement, the annuity issuer guarantees payments in the terms of the structured settlement agreement to the party involved. However with structured settlement mutual funds there is no guarantee of your investment. The returns with structured settlement mutual funds will be determined by the share prices of the equity mutual fund.

With a structured settlement, the income from the fixed annuity is tax free, if the income is the result of personal physical injuries or a physical illness. On the other hand, with structured settlement mutual funds as an option, taxed must be paid as income from the sales of the mutual funds shares. There are other tax concerns with capital gains and or losses from the selling of equity mutual funds.

With a structured settlement, you can not make changes after you settle. The payment amount and schedule are fixed. You may not change or accelerate your payment agreement. An advantage of structured settlement mutual funds, is that you can withdraw money and move from one mutual to another.

As you can see, there are many advantages and disadvantages with structured settlements and structured settlement mutual funds. When considering the financial option that is best for you, always retain an experienced attorney, before you make any type of financial decision.