Fri. Jun 9th, 2023

Indiana Structured Settlement Protection Act

When someone settles a personal injury or wrongful death lawsuit, they may receive structured settlement payments instead of lump sum payout. These settlements provide the injured party with regular income and protect them against market volatility.

If a person wants to sell their structured settlement payments, they must first obtain the approval of a judge. This determination depends on whether it is in their “best interests” and that of any dependents.

State Insurance Laws

State insurance laws exist to safeguard consumers and guarantee insurance companies operate responsibly within their financial capacity. They also regulate market conduct, licensing practices, and reinsurance activities.

States have the freedom to set their own insurance regulations, though many do so under the National Association of Insurance Commissioners (NAIC). The NAIC creates model rules and provides regulatory support for state insurance departments.

Most states have organizations known as guaranty funds that provide protection to policyholders with claims against insolvent insurers. These funds cover homeowners, auto and workers compensation claims.

However, certain exceptions exist to a state’s guarantee fund protections. To be eligible for participation in these funds, insurers must meet certain criteria such as maintaining certain amounts of capital and surplus.

Structured settlements are insurance contracts that pay out payments over an extended period. They’re commonly used in catastrophic injury cases to cover medical bills.

Structured settlements can be advantageous to both parties, particularly when involving minors. These contracts help expedite the resolution of the case and often shield victims from future lawsuits.

Structured settlement payment rights can only be sold once a court approves the deal. The judge must decide that transferring payments will benefit the payee, their family members or dependents, and the buyer or factoring company must disclose their value upfront. In certain circumstances, sales may not go through if hardship exists for either party.

States can pass laws safeguarding structured settlement holders from abusive sales practices. These statutes, known as Structured Settlement Protection Acts or SSPAs, were first passed in 1998 in Illinois and since then have been implemented in Kentucky and Connecticut. Furthermore, the federal government has officially recognized these laws and encouraged other states to pass their own SSPAs.

See also  Structured Settlement Buying


Inflexibility is a term that describes an attitude of resistance to change or being rigid. This can be an issue with structured settlements, since they often demand rigid payments that cannot be altered by their recipients.

Structured settlements, due to their inflexibility, can have a detrimental effect on an individual’s finances and overall well-being. Furthermore, structured settlements may prevent victims from recovering compensation for their injuries.

Structured settlements do not possess liquid assets like stocks and bonds, thus cannot be sold to meet short-term cash needs or finance major purchases.

Due to this, structured settlements may not be the best solution for everyone. Instead, individuals should consider other forms of restitution like settlements for pain and suffering or lump sum claims.

Multiple states have passed Structured Settlement Protection Acts (SSPAs), which govern the transfer of payment rights from an obligation to its payee. These statutes aim to prevent unauthorized sales of structured settlements and guarantee that any proceeds generated are put to their intended use.

In Indiana, sellers who wish to sell structured settlement payment rights must seek independent legal and accounting counsel before making any decisions. The price, terms of the sale are also under scrutiny as is how much is disclosed regarding the structured settlement payment amounts involved.

This is because the Indiana Structured Settlement Protection Act is a complex piece of legislation that requires collaboration among multiple agencies and departments for it to function correctly. Complying with it can be an ordeal, especially if you plan on selling your structured settlement.


Structured settlements are an invaluable way for injured individuals to safeguard their long-term financial needs. They provide tax-exempt income that helps offset expenses such as missed wages and mounting medical bills, providing injured parties with a financial safety net that could otherwise go unmet. Structured settlements offer injured parties a way forward towards more secure futures by offering them tax-free income in the form of income.

When receiving a structured settlement, it’s essential to comprehend its workings and any taxes associated with it. For optimal results, consult an experienced lawyer who can assist in setting up the payment plan for you.

In the United States, there are various taxes that could potentially impact your settlement proceeds. These include the net investment income tax and income tax. Fortunately, certain taxes can be avoided with a structured settlement.

See also  Structured Settlement Companies in Florida

For instance, if you receive a structured settlement, the money can be invested into an annuity that will pay out over time. This type of annuity will not be subject to taxation since it isn’t invested in stocks or other financial assets.

Another way to reduce taxes is to place your settlement money into a trust that will pay it out at specific intervals. Doing this will shield you from having to pay taxes on annuity income as well as interest earned on the annuity.

By doing this, you will only owe tax on the annuity interest if it exceeds the amount invested into it. This protects your money from becoming taxable and gives you more of your settlement to use in case of emergency – particularly important if you’re suffering from an injury that requires lifetime rehabilitation and special equipment.

Insurance Companies

If you have experienced a serious injury, structured settlement may be offered instead of a lump sum. This option provides greater long-term financial security and may be suitable for settling a catastrophic injury case; however, this process can be complex and necessitate the assistance of experienced legal counsel.

State laws that shield you from potential sales of structured settlement payment rights are known as Structured Settlement Protection Acts (SSPAs). The federal government has encouraged states to pass SSPAs, with Illinois becoming the first state to do so in 1998.

An insurance corporation is a business that creates insurance policies and offers various intermediation services in the marketplace. These include policy origination, funding, monitoring, and claims transformation.

Additionally, an insurer must adhere to state regulatory standards and pay fees and taxes to the jurisdiction in which it conducts business. Furthermore, it must abide by a corporate code of conduct.

Mutual insurance companies are companies owned and controlled by policyholders. They usually distribute dividends annually to their policyholders.

Dividends are a reward to policyholders for choosing to insure with this company. The amount of the dividend is decided by management and board of directors; many large mutual companies have paid dividends even during difficult economic conditions. Unfortunately, no guarantee can be given that an insurance corporation won’t run out of money or become bankrupt; hence state insurance laws provide safety nets in case your coverage is lost.

See also  Cashing Out a Structured Settlement

Partial Disbursement

When an injured person wins their case, they may receive a structured settlement instead of one lump sum payment. These regular payments can help cover expenses related to medical bills, rehabilitation fees, specialized equipment and care as well as provide them with an income that is fixed for life.

The Indiana Structured Settlement Protection Act offers certain legal safeguards for recipients of structured settlement payments. Furthermore, it prohibits transfers of structured settlement payment rights between parties without court approval.

A transfer agreement must clearly state the amounts and due dates of structured settlement payments to be transferred, as well as an estimate of their present fair market value. It must then be signed by both parties and approved by a court.

However, there is a major gap in state-level protections for investors looking to purchase another person’s structured settlement payment rights. In 37 states, these investors lack protection under an SSPA.

Investors wishing to avoid this must obtain a special exemption from the IRS. This exemption is only granted to those who acquire structured settlement payment rights through transactions that meet a state’s Small Business Sales Tax Act (SSPA).

If you are thinking of selling your structured settlement payments, be sure to speak with an experienced attorney first so that the sale is legal and does not put you at risk for fines or other sanctions. Contact Stephenson Rife now to book a consultation!

If you or a loved one has suffered an irreparable catastrophic injury, it’s essential to know your rights and safeguard them. To discover more about your legal options, get in touch with an Indiana personal injury lawyer at Stephenson Rife today!

Jeffrey Augers
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By Jeffrey Augers

Jeffrey Augers is a highly skilled and experienced financial analyst with over 12 years of experience in the finance industry. He has a proven track record of delivering exceptional financial insights and recommendations to clients, empowering them to make informed decisions and achieve their financial goals. Jeffrey holds a Bachelor's degree in Finance from the University of Michigan, and an MBA from the Wharton School of Business.