Rated Ages can dramatically increase the performance of a structured settlement annuity and should almost always be explored prior to settlement negotiations. Injury victims may be assigned a Rated Age by the medical underwriters of structured settlement providers after they review summary medical information related and/or unrelated to the injury victim’s claim. This subjective determination often results in a range of rated ages among competing annuity carriers. A full-market, rated age study should be conducted by the plaintiff structured settlement specialist to ensure maximum benefits are obtained for any life-contingent benefits. Because medical underwriting is a subjective process often associated with larger personal injury settlements, it is recommended that plaintiff’s counsel consult with only experienced, plaintiff-only, structured settlement specialists to maximize recoveries and prevent any abuse of the process by liability insurers and their settlement advisors.
To illustrate the financial impact a Rated Age may have on a structured settlement annuity, consider the cost of an annuity which would pay Bill, a forty-year old male, a lifetime payment stream of $2000 per month increasing 2% each year, compounded annually. Unfortunately, this man suffered spinal cord injuries as the result of his auto accident.
Failure to consider the Rated Age for this client may lead one to spend $606,354 to fund his annuity stream outlined above. If only the defense insurer had access to this Rated Age, they could offer this stream of payments for as little as $423,758 if Bill were given a Rated Age of 60. And if Bill’s attorney didn’t have access to this information, he could believe defense is spending $606,354! Can you imagine the very real problem that Bill’s attorney would have on his/her hands if he/she included the inflated annuity cost figure in his/her contingency fee calculation?
$2,000/month for life, increasing 2%, 50 year-old male
Rated Ages can be a very useful tool in the right hands and a very dangerous tool in the wrong hands. Plaintiff’s counsel is strongly encouraged to seek assistance on any case which may even possibly involved a Rated Age, despite what other medical providers may opine regarding life expectancy. Annuity carriers understand they are in competition on Rated Age cases and will often give a second and even third look at their Rated Age assessments. Not all carriers choose to compete in this market and some will pick and choose which type of cases they wish to write. This is one area the plaintiff attorney should seek an experienced, plaintiff-only, structured settlement specialist.