How They Work, Payments, Taxes and What to Know
If you have received a legal settlement and are researching Aegon structured settlements, Aegon annuities, or structured settlement payments, you may have questions about how these arrangements work, who makes the payments, and what happens if you want a lump sum instead.
Structured settlements can be confusing because they involve several moving parts: the settlement agreement, an insurance company, scheduled payments, tax rules, and sometimes a court-approved transfer.
One important point should be made at the beginning: Aegon’s U.S. business has historically been involved with structured settlement annuities, but new sales of U.S. structured settlement annuities were discontinued in 2003. Aegon USA continued to administer its existing closed block of structured-settlement business.
That distinction matters if you are searching for a new Aegon structured settlement annuity today.
What Is a Structured Settlement Annuity?
A structured settlement is a legal settlement where the person receiving compensation gets the money through scheduled payments rather than receiving the entire settlement as one lump sum.
These payments may be made monthly, annually, or according to another schedule agreed upon as part of the settlement.
A structured settlement is commonly associated with personal injury or wrongful-death claims. In a typical arrangement, an insurer issues an annuity that helps fund the future payments promised under the settlement. The U.S. Treasury describes this basic structure as a settlement where a company assumes the payment obligation and purchases an annuity to fund payments to the injured person.
The idea is straightforward:
Legal settlement → payment schedule → annuity funding → periodic payments
The exact structure, however, depends on the settlement agreement and the applicable law.
What Are Aegon Structured Settlements?
Aegon has historically had a U.S. structured-settlement annuity business. However, according to Aegon’s published corporate reporting, new sales of structured settlement annuities were discontinued in 2003, while Aegon USA continued administering its existing closed block of business.
This means someone searching for an old Aegon structured settlement annuity may be dealing with an existing contract rather than a product that is currently available for new purchase.
This is especially important when researching older settlement documents, payment statements, beneficiary information, or questions about an existing contract.
How Do Structured Settlement Payments Work?
The payment schedule is normally established when the settlement is created.
For example, a settlement might provide:
- Monthly payments for a certain number of years
- Annual payments
- A combination of immediate and future payments
- A guaranteed number of payments
- Payments that continue for the recipient’s lifetime
- Future lump-sum payments at specified dates
The actual terms depend on the contract.
Unlike an ordinary bank account, a structured settlement isn’t simply a cash balance that you can normally withdraw whenever you want. The payment rights are governed by the settlement and related contracts.
That is one reason it is important to read the original settlement documents before making decisions about the payments.
Can You Sell an Aegon Structured Settlement?
This is one of the most common questions people have.
In some circumstances, a structured-settlement recipient may be able to transfer or sell future payment rights to a third-party company in exchange for a lump-sum payment.
However, this isn’t as simple as cancelling an annuity and withdrawing the money.
Federal law can require court approval for certain transfers of structured-settlement payment rights. The court generally considers whether the transaction is appropriate for the recipient.
If you are considering selling future payments, compare the total future payments you would give up with the amount of cash you would receive today. Fees, discounts, taxes, and the timing of payments can significantly affect the economics of the transaction.
Never make the decision based only on the advertised lump-sum amount.
Are Structured Settlement Payments Tax-Free?
Tax treatment is one of the biggest reasons structured settlements receive attention.
For qualifying structured settlements, particularly those arising from certain physical-injury claims, federal tax treatment can be favorable. However, not every annuity payment is automatically tax-free.
The tax treatment depends on the nature of the settlement, the underlying claim, the contract, and applicable tax law.
The IRS explains that annuity taxation can depend on whether payments represent a recovery of the recipient’s investment in the contract or taxable income.
Because tax rules can be complicated, don’t assume that a payment is tax-free simply because it comes from an annuity.
If your settlement involves substantial money, consult a qualified tax professional before changing the payment arrangement or selling future payments.
Aegon Annuity vs. Structured Settlement: What’s the Difference?
The terms can sound similar, but they aren’t necessarily interchangeable.
An annuity is generally a contract providing payments over a period longer than one year. The IRS recognizes several types, including fixed-period, single-life, joint-and-survivor, and variable annuities.
A structured settlement, on the other hand, is connected to the resolution of a legal claim and uses a payment structure designed to satisfy the settlement obligation.
In simple terms:
| Annuity | Structured Settlement |
|---|---|
| Can be purchased for various financial purposes | Usually connected to a legal settlement |
| May provide retirement or other income | Provides payments under a settlement arrangement |
| Can have different payment structures | Payment schedule is established as part of the settlement |
| Tax treatment varies | Tax treatment depends heavily on the underlying claim and applicable law |
So, an Aegon annuity and an Aegon structured settlement should not automatically be treated as the same type of financial arrangement.
What Happens If You Have an Old Aegon Settlement?
If you already receive payments connected with an older Aegon structured settlement, start with your paperwork.
Look for:
- The original settlement agreement
- Annuity or contract documents
- Payment statements
- Beneficiary information
- The name of the current administrator or insurer
- Payment dates and amounts
- Any guaranteed-payment provisions
If the original paperwork is unavailable, contact the appropriate company or administrator using verified contact information rather than relying on an unverified phone number or website found through an advertisement.
Old insurance and annuity contracts can have specific provisions that aren’t obvious from a payment statement alone.
Can You Change the Payment Schedule?
Usually, you should not assume that a structured settlement payment schedule can simply be changed.
The payment schedule is part of the contractual arrangement. Changing, assigning, or selling future payments may involve legal requirements and, in certain circumstances, court approval.
Before taking action, determine exactly what your contract allows and whether a proposed transaction affects your tax position, government benefits, estate planning, or other financial arrangements.
Aegon Structured Settlement: Frequently Asked Questions
Does Aegon still sell structured settlement annuities?
Aegon’s historical U.S. reporting states that new structured-settlement annuity sales were discontinued in 2003, while Aegon USA continued administering a closed block of existing business.
Are Aegon structured settlement payments taxable?
It depends on the underlying settlement and applicable tax rules. Certain qualifying structured-settlement payments may receive favorable federal tax treatment, but you should not assume every payment is tax-free.
Can I sell my structured settlement payments?
Depending on the circumstances and applicable law, future payment rights may potentially be transferred to a third party. Certain transfers require court approval.
How do I find information about an old Aegon annuity?
Start with your original settlement documents, policy or annuity contract, payment statements, and correspondence. These documents can help identify the relevant insurer, administrator, contract number, and payment terms.
Is an annuity the same as a structured settlement?
No. An annuity is a financial contract that can serve several purposes. A structured settlement is generally connected to resolving a legal claim and may use an annuity to fund scheduled payments.
Final Thoughts
An Aegon structured settlement or annuity can involve long-term financial and legal obligations, so understanding the original contract is more important than relying on a generic online explanation.
If you are researching an older Aegon structured settlement, first determine whether you are dealing with an existing contract from Aegon’s historical U.S. structured-settlement business. Aegon’s published information indicates that new U.S. structured-settlement annuity sales ended in 2003, although an existing closed block continued to be administered.
Before selling future payments, changing beneficiaries, or making a major financial decision, review the settlement documents and obtain advice from appropriately qualified legal and tax professionals.
Important: This article is provided for general educational and informational purposes. It is not legal, tax, investment, or financial advice. Laws and tax rules can change, and your situation may be different from the examples discussed here.