Insurance companies like to bring a structured settlement broker to mediations. Ever wonder why? It is quite simple. With today’s low interest rates the insurance company wants to lock the injured person into a low interest rate for life. That means if interest rates rise, the insurance company will start making money off the injured person’s money.
With interest rates currently around 1% there is not much room for interest rates to go down, but a whole lot of room for interest rates to go up. If the injured person is locked into a 1% structured settlement, and interest rates go up, there is nothing the injured person can do about it. That is a terrible position to be in.
At Bailey and Oliver, we recommend our clients use the services of Forge Consulting, LLC. Forge will invest the settlement funds in a laddered bond portfolio instead of the structured settlement offered by the insurance company. Forge will hold the bonds in a trust containing bonds with different maturity dates. With this trust, the injured person will be able to take advantage of rising interest rates and continue to earn interest on the settlement money at the higher rate if rates rise.