Structured Settlements - Plaintiff Loyal Structured Settlement Company

What is medical underwriting, and why is it helpful to obtain a “rated age”?

ANSWERS TO 4 COMMONLY ASKED QUESTIONS

What is medical underwriting, and why is it helpful to obtain a “rated age”?

Medical underwriting is the process annuity companies use to evaluate the remaining life expectancy of an injured or medically impaired prospective annuitant. Life insurance companies offering lifetime annuities will evaluate an injured party’s medical records in an effort to determine the extent to which the injured party’s medical condition affects his/her remaining life expectancy.

This process is important in determining the premium charged for a lifetime annuity. The medical impairment rating, or “rated age“, can significantly improve the payout per premium dollar on a lifetime annuity, since the rated age, rather than the biological age of the annuitant is used to price the annuity. Any health impairments (obesity, smoking, high blood pressure, diabetes, etc), whether related to the injury or not, can and should be sent to the annuity companies for consideration as well.

Rated Ages “True or False”

True or False: A “rated age,” rather than a plaintiff’s biological age, is used to decrease the price of a lifetime annuity for an injured plaintiff.

• True: Rated ages can significantly improve the payout on a lifetime annuity. The annuity company uses the rated age to price the annuity, which decreases the cost of the lifetime annuity payments.

True or False: The annuity company underwriters will only evaluate the medical records for injuries that were a direct result of the injury claim.

• False: Any health impairments (obesity, smoking, high blood pressure, diabetes, etc), whether related to the injury or not, can and should be sent to the annuity companies for consideration.

True or False: Submitting medical records to obtain a rated age is labor intensive, and can significantly delay the settlement process.

• False: Most life insurance companies offering medical underwriting to structured settlement annuitants need only 10-30 faxed pages of relevant medical records, and generally respond with a rated age within 1-2 business days.

At what point in the case should I involve a settlement planner?

There is no hard and fast rule regarding when to involve a settlement planner. However, as a general rule, the earlier a settlement planner is involved the better. This increases the chance that your client will receive the best possible advice.

Traditionally, settlement planners have been called after the case has settled or at the point of settlement. Many attorneys don’t think to involve a settlement planner unless the client needs or wants a structured settlement annuity. In such a case, the settlement planner is involved as a matter of necessity to facilitate the purchase of the qualified structured settlement annuity.

This is an important function, but simply relying on your settlement planner to implement a qualified structured settlement annuity does little to really help the client address his/her future financial needs and goals.

While most planners are happy to be involved at any point in the process, clients are much better served when a settlement planner is involved early in the case. Arranging a pre-settlement meeting with a settlement planner allows the client time to discuss his/her post-settlement financial situation with a professional who can help them make the most of their settlement recovery. This allows your settlement planner to help your client develop a sound settlement plan and give your planner adequate time to help you prepare for mediation. It is best to arrange a meeting 30-60 days prior to mediation or arbitration.
Time before mediation allows your planner to complete the medical underwriting process, analyze and “annuitize” the Life Care Plan, and begin to develop the skeleton of a sound settlement plan. The financial decisions surrounding the client’s net settlement will likely be the most important financial decisions the client has ever made. This decision should not be rushed or decided in the closing minutes of a heated mediation conference. The financial decisions the client makes at the time of settlement may impact that client for the rest of his/her life, and require careful planning and consideration outside the heat and pressure of mediation.

The time prior to mediation can also be used to educate your clients on the settlement planning process — including the tax implications of the settlement recovery, the impact the settlement will have on current or future government entitlement eligibility, and the various funding options (structured settlements, settlement trusts, managed accounts, etc.). The earlier you involve your settlement planner in your cases, the better the chance that your client will implement a sound settlement plan that will make the most of the net settlement recovery.
Aren’t all structure brokers the same?

In short, no …. and yes. It’s true that most structure brokers can seem like commodities. Most brokers have access to all of the life insurance companies offering structured settlement annuities and most will get the same rates from those companies. So, in that sense, any structured settlement broker can quote an annuity and have access to the same companies and the same annuity rates.

However, it is extremely important to understand the most important differences among brokers, because there is a segment of the structured annuity industry that is quite different from the rest.

Certain structure brokers are actually “settlement planners” rather than just a “structure broker.”

These settlement planners take a holistic approach to the process of advising injured plaintiffs. They approach the settlement of a personal injury claim as an opportunity to create a personalized “settlement plan” unique to the needs and goals of each client. Such a settlement plan may or may not include the use of structured settlement annuity. Settlement planners serve as a fiduciary instead of a salesperson.

They add value to the professional relationship in contrast with their “in-and-out” transactional counterparts who merely push an annuity product that may or may not be suitable for the circumstances.

Settlement planners analyze each client’s post-injury life situation to find the optimal solution or mix of solutions. This may include assessing dissipation risk, analyzing liquidity needs, planning for government entitlements, estate planning, tax planning, and reviewing insurance needs. The solutions may involve special needs trusts, spendthrift trusts, investment accounts, credit repair services, or budgeting advice. It is important to ask the structured settlement broker of your choice what services he/she is willing to provide your client before and after settlement to make sure that your client is getting comprehensive advice and service, not just a structured settlement quote.

So yes…structure brokers are all the same.

And no…structure brokers can be very different.

Can you afford to allow your clients to deal with anyone other than a comprehensive Settlement Planner?