Structured Settlements for Tax-Free Damages


As a claimant in a legal dispute involving personal injury or workers compensation, you may wish to defer the receipt and taxation of your tax-free damages awarded in a settlement to manage future cash flow. As you will have been advised by your tax advisor, favorable tax case law allows you to time the payment of tax-free settlement proceeds if you operate within an established framework.

DAC provides the framework upon which you and your trusted tax and financial advisors can build a long-term financial plan for you to receive enhanced tax-free settlement proceeds and provide greater control over the timing of the receipt of your settlement proceeds.

Key Benefits

  • There are no maximum limits on amounts you can defer and no age-related restrictions on when deferred settlement proceeds can be paid.
  • Your settlement proceeds are invested on a fully tax-free basis with an independent insurance company.
  • You can choose from a range of insurance company annuities in consultation with your advisors.
  • Fully tax-free payments are made under an agreed periodic payment plan.

You can defer tax-free settlement proceeds of $50,000 or more to be invested in a fixed indexed annuity contract issued by a U.S. life insurance company. The payments generated combine features of fixed (guaranteed) and variable (based on a stock market index) annuity contracts. Fixed indexed annuity contracts often provide complete downside protection in the form of a 100% return of principal guarantee.