A structured settlement is a personal injury damages award where the defendant agrees to make periodic payments to the plaintiff rather than pay a lump sum award.
The defendant’s insurer will typically fund the settlement with an annuity policy from a licensed insurance company in the state where the plaintiff resides. The insurance company may purchase the annuity at a discounted rate and then payout in installments over several years (or decades). Structured settlements are often used in product liability and medical malpractice lawsuits.
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A structured settlement may be appropriate where the damages are relatively large, and there is a high degree of certainty that the defendant has sufficient resources to satisfy the obligation. In the United States, structured settlements have been used since the 1970s and have become more common in the 21st century.
However, if you’d rather get a large sum of money at once, a structured settlement company can help. The company boasts of a seamless, structured settlement buyout procedure, and they’ll ensure you get all your money as soon as possible.
Meanwhile, let’s look at how a structured settlement works and if it has any benefits linked to it.
How Does Structured Settlement Work?
Structured settlements are typically issued to individuals who have suffered harm as a result of a personal injury. The settlement calls for the defendant or the defendant’s insurance company to make payments over time regardless of how long the injured party lives. In most cases, structured settlements offer tax-free payments and guaranteed income for life. They can also include provisions that pay beneficiaries an additional amount if the injured person dies before receiving all of their scheduled payments.
A structured settlement may be awarded by a court as part of a legal judgment or arranged privately through negotiations between representatives of both parties to resolve legal claims. Typically, only cases involving personal injuries qualify for structured settlements. Jurisdictions may vary in their particular requirements, but they generally include negligence cases. These are cases such as-
- Slip-and-fall accidents
- Medical malpractice
- Product liability
- Automobile accidents.
What to Expect from a Structured Settlement?
Structured Settlements have many benefits. These include;
- They provide a secure, guaranteed income stream to compensate you for your injuries.
- They are tax-free, which means you will receive more money in the end than if you had taken a lump sum of cash.
- Offer peace of mind-Structured settlements also offers peace of mind because they eliminate the stress and pressure that often come with large amounts of cash. The guarantee that you will receive regular payments relieves you from the worries that can accompany investing a large sum of money.
- Customizable- They can be tailored to meet your individual needs.
If you are fortunate enough to win or settle a lawsuit, a structured settlement may be right for you.
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Key Takeaway
Whether the issuer is a court or an insurance company, structured settlements are designed so that plaintiffs receive periodic payments from defendants in equal installments or varying amounts over time. Settlements usually do not provide for lump sums but are paid out in regular installments over several years or even decades. This provides steady income for injured parties.
Keep in mind that it’s critical to involve an expert attorney since they can help you determine whether this option is right for your particular situation, so contact a skilled attorney today to find out more about structured settlements.