Structured Settlements - Ringler Associates

Structured SettlementsSURVEY REPORT

Executive SummaryThe results of this consumer survey of more than 1,000 Americans illustrate theneed to educate Americans on structured settlements. Without awareness, themajority of those impacted by personal injury or accidental death cases run therisk of making ill-informed choices that may jeopardize long-term financial health.The survey was conducted by Esearch.com, Inc., and was sponsored byAmerican General Life Structured Settlements. The research, conducted inSeptember 2007, focused specifically on settlements awarded in personal injurycases. Of the respondents, 80 percent had no direct connection to a personalinjury case, while the remaining 20 percent cited that they or a family memberwere involved in a personal injury case.Those who had no connection to a personal injury case were asked to readtwo hypothetical scenarios and answer questions on how they would react.Those with a direct connection to a personal injury case were not only askedto read the hypothetical scenarios, but also answer questions on their real lifeexperience. The following report shares the hypothetical scenarios and thefindings from the survey.

Real-Life CasesCar accident scenarioYou are 35 years old, married with threekids and hold a full-time job. While ata busy intersection on your way homeone night, your car is blindsided by anSUV. The driver of the SUV sustainsminor injuries; however, you are notso fortunate. You are transported byhelicopter to the nearest hospitalwhere doctors are able to save yourlife, but determine you are paralyzedfrom the waist down. After monthsof physical and emotional rehabilitation,you are able to return home to yourfamily and with physical therapy maybe able to some day resume yourcareer. After years of litigation, thecourts determine that the driver ofthe SUV was at fault and award you 750,000. At this point you mustnow make a decision on what todo with the lawsuit award.Killed on the jobscenarioYou are a recently married, 22-yearold woman whose spouse works inconstruction. You are expecting yourfirst child in the next three months.You are currently not employed andyour spouse’s job is the family’sonly source of income. While at askyscraper construction site onerainy day, your spouse loses hisfooting and plunges 15 stories. Heis pronounced dead at the scene.Not looking for negative publicityand to put the case behind them,the construction company offersyou a settlement of 2.5 million.After careful consideration andknowing how stressful the next fewmonths will be for you, your attorneyadvises you to take the settlement.

Settlement Choice ComparisonsCHART 1 – CAR ACCIDENT SCENARIOAfter an incident of a car accident involving a personal injury case for the respondent was presented,the survey inquired as to how the victim would prefer to receive his/her settlement. With no educationon the difference between a lump-sum and a structured settlement, 65 percent of respondents chosea lump-sum settlement and 35 percent chose a structured settlement.35%lump sum Chose Chose structured settlement65%CHART 2 – REASONS FOR CHOOSING A LUMP-SUM SETTLEMENTOf the respondents that chose the lump-sum option, 49 percent made that election because theybelieved they could make their own long-term financial decisions and plans. In addition, 26 percentof those who chose the lump-sum option did so because they wanted to allocate money to pay offlarge bills and reduce debt.26%16%49%1%2%6%make own financial decisions and plans Canoff large bills and loans Payflexibility and not locked into an annuity ProvidesGuaranteesindependence To avoid livingfinancialonpublicassistance Other CHART 3 – KILLED ON THE JOB SCENARIODescriptions of lump-sum vs. structured settlement were presented to respondents. They were thenpresented with a description of an incident where a spouse was killed on the job. Of the respondents, 73percent chose the structured settlement option, and 27 percent chose the lump-sum settlement option.27%This is a 108 percent increase, or a 38 percentage point increase from the car accident scenario.Key takeaway: After being educated on the difference between a lump-sum and a structuredsettlement, 73 percent of Americans would choose a structured settlement payout when theyreceived their settlement in a personal injury case.73%structured settlement ChoseChose lump sum19%5%3%1%1%71%CHART 4 – REASONS FOR CHOOSING A STRUCTURED SETTLEMENT71 percent of the respondents that chose the structured settlement made that choice because itwould provide a regimented income for monthly expenses.regimented stream of income for monthly expenses. ProvidesGuaranteesfinancial independence To continue payinglarge bills and loans Don’t trust self or familymake financial decisions and plans To avoid living on public toassistance Other

7%7%86%CHART 5 – REAL-LIFE PERSONAL INJURY CASESOf the 1,000 respondents surveyed, 20 percent reported they had a direct relationship with a personalinjury case. In that group, 86 percent reported that they or a family member chose a lump-sumsettlement option.lump sum Chosestructured settlement ChoseChose combination of bothCHART 6 – PERSONAL INJURY VICTIM’S OR FAMILY’S KNOWLEDGE OFSTRUCTURED SETTLEMENTSOf those who chose the lump-sum settlement, 57 percent of them did not know what a structuredsettlement was.43%not know DidDid know57%29%CHART 7 – DID ATTORNEY INFORM CLIENT OF STRUCTURED SETTLEMENT OPTION?In addition, 64 percent of those who chose a lump-sum settlement said that their attorneydid not inform them about structured settlements.Key takeaway: Personal injury victims and/or their families need to be educatedby their attorneys or financial advisors of all settlement options available.7%64%12%10%9%57%7%5%5 %did not inform them AttorneyAttorneydid inform them Did not remember CHART 8 – REMAINING PORTION OF LUMP-SUM SETTLEMENTOf those who took the lump sum, 57 percent reported that the entire settlementis depleted.settlement is depleted Entireor more remains 75Lesspercentthan25percent remains Between 25 andremains Between 50 and 5075 percentpercentremains Did not answer

About the StudyThe American General Life Structured Settlements research was conductedin September 2007 by Esearch.com, Inc. The survey had a margin of error ofplus or minus 3.10 percent at a 95 percent level of confidence. For moreinformation on the study, as well as details about structured settlements,visit www.americangeneral.com/structuredsettlements.The underwriting risks, financial obligations and support functions associatedwith the products issued by American General Life are its responsibility.American GeneralLife does not underwrite any insurance policy referencedherein. American General Life is responsible for its own financial condition andcontractual obligations. Guarantees are subject to the claims-paying ability ofAmerican General Life. American General Life does not solicit business in thestate of New York. Policies and riders are not available in all states.American General Life Companies, www.americangeneral.com, is the marketingname for the insurance companies and affiliates comprising the domestic lifeoperations of American International Group, Inc. (AIG), including AmericanGeneral Life Insurance Company. 2012 American International Group, Inc. All rights reservedAmerican General Life Insurance Company (AGL), 2727-A Allen Parkway, Houston, Texas 77019. The underwriting risks, financial and contractual obligations and support functionsassociated with the products issued by AGL are its responsibility. Guarantees are subject to the claims-paying ability of the issuing insurance company. American General Life Companies, www.americangeneral.com, is the marketing name for a group of affiliated insurance companies including AGL. These product specifications are not intended to be all-inclusive of product information.State variations may apply. Please refer to the policy for complete details. IMPORTANT: Prior to soliciting business, be certain that you are appropriately licensed and appointed with the insurerand that the product has been approved for sale by the insurer in that state. If uncertain, contact your American General Life Companies representative for assistance. 2012. All rights reserved.For Producer Use Only—Not for Dissemination to the Public.AGLC106228-SS

Key takeaway: After being educated on the difference between a lump-sum and a structured settlement, 73 percent of Americans would choose a structured settlement payout when they received their settlement in a personal injury case. Chose structured settlement Chose lump sum CHART 4 - REASONS FOR CHOOSING A STRUCTURED SETTLEMENT