It is an annuity issued by an insurance company. An annuity is the mathematical liquidation of both principal and interest. Why a structured settlement annuity is special is that it has a tax free payout. That is why a structured settlement annuity is used in lawsuit settlements. When a amount is determined (an award) the insurance company can take that amount, figure what the interest will be for the future and come up with a guaranteed amount that will be paid out over a certain number of years. That amount can be paid monthly, quarterly semi- annually, annually or in a number of lump sum payments. The annuity is a useful financial tool.

Speaking of the annuity as a useful financial tool, they are used to pay out large lottery and casino winnings. Many times you will hear of a million dollar winning only to found out that its paid over 26 years. Its more like a $325,000 winning plus interest add in to equal 26 payments amounting to a total of one Million dollars.

When selling an annuity such as a structured settlement or a lottery and casino winning, be sure to find an ethical broker or company to sell to. Once the sale is make you cant get your annuity back.