Guaranteed payments are payments that will be made for a guaranteed period of time to either the annuitant or to a beneficiary. Non-guaranteed payments or life contingent payments are paid out for a period of time that is dependent upon the annuitants vital status. In other words if the annuitant dies, so do the payments.

How does this effect a structured settlement factoring transaction?

Structured settlement factoring transactions are priced using many variables to determine the overall risk involved in the transaction (i.e. Insurance company rating--A- AAA, length of payment stream, and guaranteed vs. non-guaranteed payments). If a structured settlement factoring company purchases a life contingent payment stream and the annuitant dies a year later, the factoring company will never receive any money.

Life contingent payment streams are not impossible to accomplish, but are more expensive. Depending upon the annuitants age, health, driving record, medications, and other information a life insurance policy can be purchased with the factoring company as the beneficiary. The purpose of the life insurance policy is to ensure the factoring company that they will either receive all the life contingent payments that were originally purchased, or upon death of the annuitant, the factoring company will receive a payout from the life insurance policy.

Not only are non-guaranteed payments more expensive to sell, but the transactions take much longer to fund as well. If you would like more information on non-guaranteed payments vs. guaranteed payments please contact us.