Structured settlement funding is usually determined by the amount of compensation that is awarded in court by the judge – known as the judgment sum.
In most cases where the judgment sum is an amount that is far too large for the defendant to pay all at once, rather than forcing them to go bankrupt the judge will rule that the amount has to be paid in a series of installments over time.
The insurance structured settlement will then be negotiated by the two parties involved, or if agreement cannot be reached, then the judge will appoint a structured settlement broker to arrange a deal that is acceptable to both.
Negotiating structured settlement funding
Ideally, the plaintiff and the defendant will be able to reach agreement through negotiation.
The plaintiff’s rights count for a lot in such negotiations, and as such they will be able to insist that their reasonable financial needs are met by the settlement.
Structured settlements have virtually unlimited flexibility – the amount to be paid in each installment can be negotiated entirely at the discretion of the two parties involved, so that the plaintiff can secure large enough payments to cover their needs.
Similarly, the defendant will want to make sure that the payments are within the boundaries of what they can reasonably afford.
The plaintiff will usually be able to specific whether the installments are paid monthly, twice a year or yearly, and they can also be structured to account for rises in the cost of living and inflation.
The length of time the structured settlement payments go on for can also be negotiated. For example, you can agree for the annuity to last for 15 years, 20 years or more. All of this needs to be carefully considered and negotiated in deals for structured settlement annuities.
Other options for structured settlement funding
The key thing to consider when negotiating your structured settlement is future eventualities.
You have to consider your likely future needs – don’t forget it’s likely that as a result of your injuries you can no longer work or earn the same kind of salary as you did before. For this reason, structured settlements can be extremely valuable.
However, if you decide that you need a lump sum rather than regular payments over X amount of years, then you do have other options available to you.
Although you will have to accept a structured settlement if the defendant cannot afford to pay you the lump sum in its entirety, it is possible to sell your structured settlement funding to a third party or obtain a loan using future payments as collateral.
Note that any possible transaction involving the sale of structured settlements has to be cleared by a court, as structured settlements are governed by certain laws which were designed to protect plaintiffs against unscrupulous buyers.
However, so long as the structured settlement quote offered by the buyer is reasonable, and so long as the seller has a legitimate reason for wanting to sell, the deal can go ahead with few problems.