This is a brief list of the most common structured settlement questions I get.
Structured settlements are used to compensate people who have been injured. As opposed to receiving a lump sum of cash, the victim instead receives regular periodical payments over a fixed number of years, guaranteeing that they will always have a source of income in case they cannot work.
How flexible are structured settlements?
The good thing about structured settlements is that they can be set up to meet all of your needs.
The payment schedule is incredibly flexible, so you could choose between receiving annual payments or monthly payments over 10 years, 20 years etc.
The judge in your case will let your circumstances dictate how the payments should be arranged.
One thing to be aware of is that the structured settlement payments do not have to be equal – Say for example you think you will need to buy a new car every three years, you could organize the payments so that you receive a bigger amount every 36 months, in order to help you pay for this.
How is the payment schedule determined?
This is one of the most commonly asked structured settlement questions. To put it simply, you will negotiate the payment structure with the defendant in your case, taking into account your needs for healthcare and your general living expenses.
It’s quite common for both sides to hire a lawyer or a consultant to help them with the negotiations.
Structured settlements are generally offered in cases where the injury victim has suffered permanent or temporary disability, cases involving minors, worker’s compensation claims, claims involving severe injury which require the victim to seek long term medical care, and finally cases of wrongful death, in which case the surviving family members will need to receive a regular income.
Why should I choose a structured settlement?
A cash structured settlement has several advantages over a lump sum:
- Structured settlements are tax free
- They can cover living expenses and long term healthcare costs
- They can be used to cover the costs of future education for the claimant or his or her children
- Offers protection against recovery from financial creditors
- Long term financial security
What are the disadvantages?
Many people asking structured settlement questions worry about the disadvantages. Basically, these boil down to two main concerns:
- Annuity holders cannot borrow against, accelerate, defer or in any way change their payment schedule once it has been set up, except in exceptional cases. However, it is possible to sell structured settlement payments if you wish to.
- Risk of default – there is small chance that the insurance company tasked with managing your structured settlement would become bankrupt and be unable to meet its obligations to you. However, this risk is very small, and there are forms of insurance that can be taken out to protect annuity payments.
So, should I take a structured settlement or not?
Structured settlements are a great solution for people with long term needs arising from a personal injury, advocated by both the government and many personal injury lawyers and financial advisors.
If you want long term financial security, then the answer is yes.