Structured Settlement Talk:  Bonds, Not James Bonds

Structured Settlement Talk: Bonds, Not James Bonds

Bonds and Structured Settlements: No More Tears

For those who remain unconvinced that Structured Settlements are still “a good deal” in today’s economy, it’s worth noting how other financial professionals view bonds and bond-based instruments such as Structured Settlements.

First, a brief comment on how structured settlement companies arrive at their rates. And I do mean brief.


OK, that may be a bit of an oversimplification but suffice it to say the portfolios of life companies offering structured settlements generally include a significant percentage of quality bond holdings. That’s because life companies are strictly regulated by the states and must meet certain risk-based capital and other requirements in the interest of consumer safety.

For the past twenty years or so, state regulators have limited what life insurers (including those offering structured settlements) can invest in. Years ago, companies could get away with reaching for higher yields by investing in riskier instruments like junk bonds.

Thankfully those days are long gone.

Today, take a look at any company offering structured settlements and you will likely find a portfolio containing 80% or more of investment grade bonds. The balance in cash, short term investments and other “sensible” assets with minimal, if any, exposure to anything considered high risk makes for a very safe bet.

One small difference. Structured settlement rates of return usually exceed bond rates by quite a few (often fifty or more) basis points!

Which brings us back to the original topic. A recent article entitled “The Age of No More Tears Investing,” which appeared in a recent edition of Fortune magazine, quotes a number of financial experts who seem to think quite a bit of bonds these days.

Click HERE to read “The Age of No More Tears Investing”

Add it all together and you have a formula that goes something like this:

If Bonds = Safe, and
Structures = Backed Mostly By Bonds, and
Financial Experts = Touting Bonds as Good, and
Structure Rates > Bond Rates, Then

It stands to reason that:

Structures = Safe + Good 4 You!

OK, so maybe my theorem needs a little re-working but you get the gist. Good economy, bad economy. Whatever the case, structured settlements are a solid choice for those seeking safety and solid performance commensurate with the risk.

Naturally, it all depends on the numbers so please call if you’d like some comparison quotes or to let me know what I can do to help. Nothing beats an informed decision. Wishing you continued success and . . .


Finn Financial Group