Buying Structured Settlements as an Alternative Asset Strategy

by석아산 • • 2 min read
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English Alt Text: A four-panel comic shows two professionals discussing structured settlement investing. The woman suggests buying structured settlements; the man looks unsure. He raises liquidity concerns; she highlights yields over 5%. She explains payouts come from major insurers; he listens. He agrees and gives a thumbs-up, saying, “Deal!”

Buying Structured Settlements as an Alternative Asset Strategy

As interest in non-traditional investment vehicles grows, structured settlements have emerged as a compelling alternative asset for yield-seeking investors.

These court-ordered payment streams—often resulting from personal injury, wrongful death, or workers’ compensation cases—offer predictable cash flows, relatively low risk, and high visibility into underlying terms.

But structured settlement investing isn’t for everyone. It involves legal diligence, secondary market access, and long-term liquidity tradeoffs.

This post explains how structured settlements work and how accredited investors can evaluate them as part of a diversified portfolio.

📌 Table of Contents

📑 What Are Structured Settlements?

Structured settlements are periodic payments awarded to individuals through legal settlements, often funded by annuities.

Instead of receiving a lump sum, recipients get monthly, quarterly, or annual payments over years or decades.

Some choose to sell these payment rights on the secondary market, usually at a discount, in exchange for an immediate lump sum.

This creates opportunities for investors to acquire the rights and receive the future payments.

💼 How to Buy Structured Settlements

Investors typically purchase these assets through:

✔ Structured settlement brokers or factoring companies

✔ Secondary market platforms (e.g., Annuity.org, Fairfield Funding)

✔ Direct private transactions with court approval

✔ Institutional marketplaces serving accredited investors only

Each sale requires a judge’s approval to ensure it's in the best interest of the original recipient, which protects the integrity of the investment.

📈 Returns and Risk Profile

Structured settlement investments are fixed income instruments offering:

✔ 4–7% average annual yields, depending on the discount rate

✔ Low correlation to equities or market volatility

✔ Fixed payments from major insurance carriers (A-rated or higher)

✔ Zero prepayment risk, but limited liquidity (cannot be resold easily)

✔ Transfers must comply with state Structured Settlement Protection Acts (SSPAs)

✔ IRS treats these investments as installment sale contracts, taxable on interest portion

✔ Investors must file form 1099-INT or 1099-B depending on acquisition structure

✔ Legal review is critical—ensure no competing claims or fraud risk exists

✔ IRA and trust vehicles may be used for tax deferral or estate planning









Important Keywords: structured settlements, alternative fixed income, secondary annuity market, passive income investing, court-ordered payouts

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