What Options Are Available For A Structured Settlement No Load
Doug Smith

Defined Tag: Structured Settlement No Load.

To determine whether a structured settlement no load, or a no load equity mutual fund is best for you financially, research the pros and cons of both. There are both advantages and disadvantages to both. Proper research can help you define what is best for your situation and life-long term financial security.

The term "no" in "no load" means that you do not pay redemption fees when shares of the no load mutual fund are sold. Many mutual funds charge front- or back-end load fees.

You need to understand fully what costs are associated with mutual funds before you can compare different funds. There are management and expense fees associated with both "no load" and "load" mutual funds. These fees are deducted from the returns.

To create a structured settlement, a fixed annuity contract is issued by a third-party (neutral party) life insurance company. The assets are invested in the insurance company's general account on behalf of the party at fault, to be paid periodically to the injured party.

With structured settlement based on no-load funds, an investment company in charge of the fund allocates the assets from many investors into equity securities.

In structured settlements, payments and distribution are determined at the beginning. This can provide a steady stream of dependable, predictable lifelong income.

Alternatively, annuity no-load mutual funds have shown the best potential for long term financial growth. A drawback to choosing no load mutual funds as your settlement option is the higher investment risk. Your income may decrease or even stop if the no load mutual fund is performing badly.

For structured annuity payments, the annuity issuer guarantees payments to the injured party according to the court-appointed terms of the settlement agreement. With choosing a settlement instrument based on no-load mutual funds, however, your investment is not guaranteed! The financial returns from the mutual funds depend on the share prices and fluctuations of the equity mutual fund. Do you really want your income based on the whims of the stock market, when it could be guaranteed for life at a fixed amount?

The income from a settled annuity is tax free if the settlement results from personal physical injuries or a physical illness.

Alternatively, when choosing the no load mutual funds option instead of a more structured option, taxes must be paid on payments received. This is because shares are sold to generate the income, and income from the sales of the mutual funds shares is taxable. There are also other tax concerns with capital gains & losses from the sale of equity mutual funds.

Recipients of court-awarded annuity payments cannot make changes after the settlement. Payment amounts and schedules are fixed, so payment agreements cannot be changed or accelerated.

An advantage of choosing a settling option based on no-load mutual funds, however, is that you can withdraw your money and move from a poorly-performing fund to one that gives higher returns. This can be a big advantage if you need to raise emergency cash.

Of course there are both advantages and disadvantages to annuity payments vs. no load funds. To determine the financial option best for you, hire an experienced lawyer. Your lawyer can advise you whether choosing the option of receiving your award money via structured settlement no load equity funds is correct for you.

This article is Copyright 2009 by Doug Smith. All Rights Reserved Worldwide. Unauthorized Duplication Prohibited. For Entertainment Purposes Only. Not Intended As Financial Advice. Consult Your Own Financial Professional.