Structured Settlements as a Portfolio Diversification Tool

When it comes to diversifying your investment portfolio, most people think of stocks, bonds, real estate, or even crypto.

But there’s one underutilized vehicle that offers consistent returns, low correlation with markets, and predictable cash flow—structured settlements.

If you're looking for a passive, income-generating asset class, structured settlements may be worth a closer look.

📌 Table of Contents

Structured settlements are periodic payments awarded to individuals, usually as a result of a lawsuit or insurance claim.

Instead of receiving a lump sum, the recipient receives fixed payments over time—monthly, quarterly, or annually.

These payments are typically funded by annuities purchased from insurance companies.

Here’s why structured settlements appeal to investors:

✅ Stable, predictable cash flow

✅ Non-correlated with market volatility

✅ Fixed rate of return over term

✅ Often sold at a discount, creating built-in yield

✅ Backed by insurance companies, adding a layer of credit quality

They are ideal for retirees or income-focused investors looking to reduce exposure to equities or speculative assets.

These assets are typically purchased through secondary markets.

When a payment recipient wants immediate cash, they may sell their future payment stream to a buyer (investor) at a discount.

You purchase the rights to those future payments, which are then assigned through a court-approved transfer process.

Platforms and brokers help source, vet, and legally transfer structured settlement deals.

❌ Illiquidity: Most structured settlements cannot be easily resold.

❌ Regulatory Hurdles: Transfers must be court-approved and comply with state statutes.

❌ Counterparty Risk: Make sure the annuity issuer is financially stable and well-rated.

❌ Tax Complexity: Income may be treated differently depending on structure and jurisdiction.

Always consult a financial advisor and legal counsel before investing in structured settlements.

Explore these in-depth guides and tools to expand your structured income knowledge:

Learn how structured settlements integrate with private placement life insurance (PPLI) for wealthy investors.

Compare return profiles, tax benefits, and liquidity options between annuities and structured settlements.

Understand how litigation finance overlaps with structured settlement markets.

Explore what to watch out for when purchasing structured income on secondary platforms.

See how structured settlements fit into long-term retirement income frameworks.

Keywords: structured settlement investing, portfolio diversification, passive income annuity, court-approved cash flow, secondary income market