The cost of a lifetime structured settlement is based upon a combination of the type of benefits being provided and the life expectancy of the person for whom the benefits are provided. Generally, the older the person, the less expensive it is to purchase the same benefits. To hold down costs for the client, a structured settlement broker will try to obtain a “rated age” or impaired life expectancy for the claimant. For example, the claimant is 40 years old but because of his injuries or lifestyle or unrelated health problems an insurance company doctor will give him a rated age of 47. This means his life expectancy is that of a 47-year-old rather than a 40-year-old and an annuity offering the same benefits costs less for a 47-year-old than for a 40-year-old. In order to obtain a rated age, a structured settlement consultant will go through the claimant’s medical file looking at the first report of hospitalization and the most recent plus anything in-between where the doctor took a good social history. Does the claimant smoke, drink to excess, have hypertension or diabetes, is he overweight, has he been treated for depression or other mental problems, is there a family history of heart disease or cancer, does he have a low education level? Any of these factors, among others, will subtract years from the claimant’s life expectancy. When the broker finds evidence of any of these factors in the claimant’s record, he will copy those pages and send them to the doctors at the life insurance companies he represents. Those doctors will decide how much weight to award those factors and will give the claimant a “rated age.”

There may be a significant spread in the rated ages awarded as this is a very subjective process. However, the structured settlement consultant will combine the rated ages with the annuity prices to determine which life company offers the best benefit for the least cost. When two or three companies have very similar pricing, the rated ages awarded can be the significant factor in determining where to place the business.

It is a structured settlement consultant’s responsibility to make every effort to obtain the best rated age that he can in order to provide the most benefit within the settlement budget.