Reasons To Go With A Structured Settlement

The majority of personal injury settlements are paid out in lump sums. This means that a defendant (or their insurance company) makes a single payment to you, settling the case in full. However, some plaintiffs opt to go with structured settlements instead of lump sum payments because of the regularity in brings. A payment of this type happens when some or all of a settlement is paid over a certain term (usually years). In many cases, part will be paid to the lawyer and plaintiff (you) immediately after the settlement, while the rest is structured over the course of the next few years. There are some cases where settlement payments could last a lifetime. If you would like to know more, continue reading.

How Do Structured Settlements Work?

If both the defendant and plaintiff agree on a settlement, the insurance company (or defendant) will transfer part, or all, of the awarded money to a different insurer. This will most likely be another insurance company, one of which specializes in the handling of structured settlements. Selecting an insurance company or structured settlement handler is very important in this regard, because you want to choose someone that has reliability in the sector. Letting the wrong company handle your structured settlement could mean serious financial trouble in the future for you if the company goes bankrupt.

Negotiating Terms of a Structured Settlement

Nearly everything, concerning a settlement, is meant to be negotiated, including the following:

• The amount of money you want in every payment;

• The structure length;

• How often the money is to be received (monthly, twice yearly, yearly, etc.);

• Whether a huge lump sum for a final payment is necessary; and

• If payments should continue to your heirs if you should pass on.

Advantages of Structured Settlements

Lump sum settlements are considered the customary method when a case is settled. A defendant sends the plaintiff (you) a check, it is cashed, and the process is over. If you decide to take a lump sum, it should be because you want or need to. But, many recommend it if you are awarded a small or medium-sized settlement. However, if you are granted a larger amount, there are a couple of reasons for going with structured settlements.

First off, this options is a guarantee that you won’t spend your entire settlement all at once. Many people who receive lump sums have a tendency to blow through the money fast. In a matter of months or years, there is nothing left. Secondly, structured settlements saves on taxes. Please note that money normally received in personal injury settlements are not usually taxable. However, you will have to pay on any dividends and interest after investing. With structured settlements, there is less in the bank and that means less money being taxed.

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