In larger ICBC claims, a structured ICBC settlement may be available to you. You must negotiate the structured settlement before judgment or during the settlement process. After judgment, the option of a structured settlement is no longer available.
A structured settlement, in simple terms, is an annuity purchased at the time of the settlement, which provides a stream of income over a certain period of time. The significant advantage to a structured settlement is that you receive a certain stream of income tax-free over a given period of time. Also, the principal of the investment and the monthly payments are creditor proof and are generally not reportable to government agencies if you are on disability. The amount you receive and the length of time over which you will receive it is highly dependent on the annuity that you purchase and your own individual choices and needs.
ICBC is usually in favour of providing a structured settlement even though they have to guarantee the structure. That is, if the insurance company that sells the structure goes out of business, ICBC may be on the hook for the structure.
Because ICBC may have to honor a guarantee, they limit the number of insurance brokers that can place the structured settlements together with the number of insurance companies that can sell the structured settlement through the insurance broker. The end result is that there is less competition and the rate of return on your annuity is usually lower than what you could otherwise potentially achieve in more risky and less conservative investments.
The obvious disadvantage of a structured settlement is that you do not get payment of your settlement amount in its entirety and do not have flexibility to use the money as you see fit. Once you buy the annuity then that is it. There is no turning back. However, it is no different than having a pension plan where you know you are getting a certain amount of income each month.