The Basics Of Structured Settlements

If you’ve been injured in an accident or as the result of negligence, many times insurance companies and businesses will settle with you out of court. One of the most common types of settlements is a structured settlement. A structured settlement is a payment schedule offered to the injured party as compensation. However, before you accept a structured settlement you should understand the basics.

What Is A Structured Settlement?

A structured settlement is an agreement reached between the injured party and the responsible party. A structured settlement is a series of regular payments paid over the course of several years or in catastrophic injury cases, potentially the rest of the life of the injured. These payments are usually made through a contract that sets up an annuity policy for the injured.

What Are The Benefits Of A Structured Settlement?

There are several benefits to accepting a structured settlement in an injury case. These benefits include:

Most structured settlements are tax free under U.S. Tax Code
The final amount of a structured settlement is usually more than a lump sum offer so the injured will receive more money for their claim.
Structured settlements ensure a steady income which is especially important when an injury has prevented the ability to work.
Annuity contracts can be flexible so if there are unexpected needs in the future, there may be compensation available by adjusting the amount of the structured settlement.
Structured settlements are protected by law, so they will always be paid.
Structured settlements can be combined with a lump sum to help reduce the burden of immediate expenses.
Structured settlements are easier to negotiate than other forms of compensation, so it is a great option when both parties disagree.

What Are The Downsides Of A Structured Settlement?

There are also some downsides to receiving a structured settlement, rather than a lump sum. These downsides include:

Structured settlements may not be enough help with immediate expenses related to the injury like large medical bills.
Structured settlements are not adjusted for the cost of living or inflation fluctuations so the value may decrease over time.
The injured can invest a lump sum and receive more money in the long run from investment returns.
Structured settlements may negatively impact your ability to receive government assistance like social security disability.
Structured settlements are a long payout so people who are elderly or have a terminal illness or injury may not see the full amount they deserve in their remaining lifetime.

Payment Options

Another factor to structured settlements is the type of payment. As a plaintiff there are several terms that can be negotiated into a structured settlement to get the best payment options for your need. First you can negotiate an initial large sum payment that can help you pay for your immediate bills. You can also structure your payments to either increase or decrease over times depending on your financial needs. Finally, you can delay your payment until a time when you will need more money such as when your savings runs out or you retire. You should consider your payment options when negotiating a structured settlement so you can maximize your compensation.

Negotiating A Structured Settlement

Most insurance companies and defendants prefer settlements because it reduces the time and cost of litigation. They also favor structured settlements because it gives them time to pay compensation without having to come up with an immediate lump sum. However, negotiating the details of any settlement, especially a structured settlement with all its variables, requires the help of a qualified attorney. An expert, like the knowledgeable attorneys at All Injuries Law Firm, will not only help you negotiate your compensation but review your case and advise you on whether or not a structured settlement is best for you. So if you have filed a claim and need legal guidance, contact us today for a free consultation.