What Are Structured Settlements and How Do They Work Exactly?


Individuals filed over 45,000 personal injury cases in 2020 alone.

Has someone close to you ever filed against a person or company who has harmed them?

It is an uncomfortable and scary situation to find yourself in, yet it is also common. Injuries and wrongful deaths deserve rightful compensation to the injured party. We are here to ensure you know your rights when it comes to payments.

Read below about how structured settlements are an effective way to receive money after winning a lawsuit.

What Are Structured Settlements

Many lawsuits end with an individual or company being owed a particular amount of money for a wrong incurred. The victim, or claimant, can receive payment in a lump sum settlement or a structured settlement.

Structured settlements are the string of tax-free payments that the injured party receives. Simply, it is compensation dealt for the injury or wrongdoing in a series of payments.

Both parties in the lawsuit work with a consultant to arrive at the total amount owed based on the plaintiff’s needs. Once settled, the consultant buys an annuity from a life insurance company. The injured party receives the scheduled payments from the annuity itself, as opposed to a physical party.

The life insurance company secures the annuity, keeping it safe from risk.  

Why Would Someone Receive a Structured Settlement

Structured settlements have been a popular method of resolution in court cases for decades. Legal settlements tend to be an easy method for the injured party to receive compensation.

Wrongful death is one case in which structured settlements are used. A family receives tax-free payments to replace the income from the loved one.

Structured settlements are also typical in personal injury cases. The individual responsible for injury pays the claimant who uses it for medical expenses, lost income, and other financial losses.

Medical malpractice is another example of a case where structured settlements often occur. The injured party or family receives payments from the medical practitioner or institution to compensate for wrongdoing.

Benefits of This Payout Method

There are many benefits of structured settlements that injured parties receive. Namely, structured settlements ensure financial security to the injured party over a long period. Lump-sum settlements can be quickly spent, whereas structured payments allow for long-term use.

Structured settlements are a valuable, untaxed asset. They are free from stock market risk and instability. Marketplaces will also buy structured settlements for a quicker turnaround.

Injured parties may pass away before they receive the full annuity. Structured settlements can have a beneficiary on file to receive the payments in this case.

Payout is kept secure in many situations, making this a fantastic compensation method.

A Long-Term Gain 

Undergoing a lawsuit and injury takes enough of your time and energy. You deserve easy compensation that sets you and your family up for success in the future. Structured settlements are the way to receive payment in a smart, efficient way after winning your case.

Your money can go far! Read more about smart money practices that ease future financial strains and emergencies.

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