One of the methods used to pay out certain types of lawsuits is through structured settlements. If you haven’t heard about this, it is a process whereby the total amount owed from a lawsuit is paid in instalments over time on a pre-determined schedule.
Let’s try to find out more about this kind of settlement and how it works. The primary benefit is that it provides you with a plan for receiving compensation over a period of time.
1) Lump sum settlement
Lump sum payments are probably the most traditional form. Typically, they are used for smaller to medium settlement amounts, although this is not always the case. If the plaintiff has bills that need to be paid stemming from the incident the lawsuit is focused on or that have piled up while going through the suit it would be important to get a lump sum to pay these off.
2) Structured settlement
A structured settlement provides you with a set of fixed periodic payments guaranteed from an insurance company putting an annuity in place. It means that your settlement is guaranteed to pay out as dictated in the settlement, and you can focus on receiving compensation for the agreed upon timeframe.
3) Present value options
The present value of a structured settlement refers to the current cash value of your future structured settlement payments. If someone decide they want to “sell my structured settlement” to a structured settlement company, they will have a set percentage they take from the value.
Now that you know the types of structured settlements available, let’s look at how this works:
Three parties are involved in each structured settlement contract:
- The injured party
- The defendant (the party being sued)
- The annuity company (an insurance company)
The claimant and the defendant agree on a set of payments to be made to the claimant in order to settle the lawsuit. The payment periods will vary per situation, and they will continue until a set agreed upon time frame that could even pay after death.
If the claimant ever needs to get a larger payment out of their structured settlement they have the option to sell their structured settlement. This involved selling their future structured settlement payments to one of the structured settlement companies and needs to be approved by the courts. Annuitants can sell some or all of their future payments.
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When receiving the structured settlement, make sure you are aware of all the rules and specifications to avoid any misunderstandings later. It would also be prudent to receive regular statements from your assigned company detailing your account balance and specifying what has been paid to you.
The best thing about structured settlements is that they provide people with a longer-term plan for compensation after an accident, injury, or medical mishap. It might take some time to receive the settlement money, but you can always opt to “sell my structured settlement” if needed.