Annuities✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
A structured settlement in a personal injury case is most often funded with which type of annuity?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Structured settlements are typically funded with an immediate annuity: the defendant or its insurer purchases a single-premium immediate annuity that produces a guaranteed, often tax-favored, stream of periodic payments to the injured party. The immediate annuity matches the settlement's need for payments beginning promptly after the funding. The injured party's receipt of payments under a structured settlement is generally excluded from gross income.
Why the other options are wrong
- B) A deferred variable annuity delays income and subjects it to market risk — unsuitable for the guaranteed periodic payments a structured settlement requires.
- C) A 403(b) TSA is a qualified retirement vehicle for school and nonprofit employees, unrelated to litigation settlements.
- D) A joint and survivor annuity measures payments over two lives, typically spouses, and is not used to fund a plaintiff's structured settlement.
Memory hook
Structured settlement = immediate annuity engine producing a guaranteed injury-payment stream.