The role of annuities in birth injury settlements
Annuities play a key role in funding the future care needs of children with birth injuries. An annuity refers to a stream of fixed payments over a specified period of time. Most jurisidictions require that funds paid to resolve a birth injury case be used in large part to purchase an annuity. There are many reasons for that, the most fundamental, is that the court can be assured that the settlement proceeds will not be mismanaged.
Annuities are purchased from large insurance companies. The purchaser gives the insurance company payment of a lump sum of money in exchange for a contractual promise to pay out a stream of money. Annuities are very flexible and can be structured in the best interests of the child. For instance, an annuity can pay a certain amount per month, with annual cost of living increases, for the life of the annuatant or for a guaranteed period of time. The cost of the annuity will vary depending upon the guarantees and annual increases. Typcially your attorney and annuity broker will help you determine what type of annuity is right for your child.
