What to check in the life insurance company behind a Structured Installment Sale (IRC §453) or attorney fee structure. These contracts can run 20-30 years, so carrier strength comes first.
A Structured Installment Sale or attorney fee deferral creates a 20-30 year payment obligation from the funding carrier to the seller/attorney. You're buying more than a product; you're locking in a multi-decade credit relationship.
For these contracts, only the strongest US life insurance carriers are appropriate:
Send me the sale price and rough basis. Within one business day I'll email you the actual number and the Seller's Guide to §453. If it doesn't fit your deal, I'll tell you that plainly.
No retainer · no obligation. Hans Goldstein, a licensed insurance agent (CA Insurance License #4273294), will contact you and may discuss insurance products, including annuities.
Check the life insurance company's current A.M. Best rating, plus S&P or Moody's where available. For a multi-decade obligation, look for an A-range rating or better, and re-check at quote time: ratings change.
The payment obligation is usually held by the carrier group's assignment company, which owns the funding annuity. Confirm it is named in your documents, licensed where required, and affiliated with the rated life insurance company. See how the assignment company works.
You are an unsecured creditor of the assignment company, and your payments depend on it and on the insurer behind its annuity. Payments are not FDIC insured. Do not count on state guaranty association coverage; it may not apply to this arrangement at all. That is why the insurer's rating matters and why larger deals are sometimes split across two insurers.
Not every life insurance company writes §453 installment-sale or non-qualified attorney fee business, and participation changes over time. Confirm the carrier is actively writing this business at the time of your quote.
Demand a side-by-side payout comparison from at least 3 carriers for any §453 or attorney fee deal. What to compare:
Under Childs v. Commissioner, 103 T.C. 634 (1994), aff'd without published opinion, 89 F.3d 856 (11th Cir. 1996), attorneys who agree to periodic fee payments before the fee is payable are taxed as each payment is received. Section 104 does not apply to attorney fees: the fees are deferred, not excluded, unlike the plaintiff's own §104 structured settlement.
Fewer carriers write non-qualified attorney fee structures than write §453 installment sales. Confirm up front that the carrier quoting your case writes attorney fee business.
Yes. For deals above $500K, splitting across 2 carriers is often recommended for credit diversification.
It matters on every deal, large or small, because the insurer's strength stands behind the annuity that funds your payments. Do not assume a state guaranty fund covers a smaller deal; it may not apply. For larger deals, multi-carrier diversification is common.
Both use the same carrier annuity products. The IRS tax treatment differs: §104 (personal injury settlements) provides full income tax exclusion on principal + interest; §453 (installment sales of business/property) provides capital gains deferral as payments are received. Same carriers, different tax sections.
Contact Hans Goldstein: hans@goldsteinco.net · 213-414-2808 · CA Insurance License #4273294
Hans Goldstein is an Enrolled Agent, admitted to practice before the Internal Revenue Service. Not affiliated with or endorsed by the IRS. General education, not tax or legal advice for your situation.