Structures: Great Yield, Great Security

“Locking into an annuity at today's historically low interest rates makes no sense.”

Advocates Anonymous

This comment reflects the general sentiment of many personal injury advocates today. Asked recently at an Advocates' Society Conference what they believe the current structure yield to be, the majority said, “in the range of 2 to 2.5%". The truth is that this guess is substantially out of line with the reality.

Currently, a structure with a guaranteed payout over 20 years is paying over 4.60%. A 30 year payout is approximately 4.64%. Both returns are completely free of income tax. Additionally, there are no loadings or fees applied to reduce these yields…ever.

Sound too good to be true? Well, it is true...and it is guaranteed and backed by virtually unparalleled security comprised of three covenants:

1. The issuing life insurer(s) - one or more of the most highly rated federally- licenced life insurers in Canada.

2. Assuris, a guarantee fund comprised of every licenced life insurer in Canada. Assuris provides coverage up to the greater of $2,000.00 per month, or 85% of the payments.

3. The owner of the structured annuity remains 100% liable for payment obligations.

The only greater security to be found is perhaps in government of Canada bonds, on which the yields are lower - and taxable. Also, bonds could result in a capital loss if traded in an increased interest rate market.

The following example illustrates the power of a tax-free structure yield over a conventional conservative taxable investment such as a government bond: