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Structured settlements, it’s not an uncommon term that floats around, in and out of people’s ears. It is often associated with lawsuits involving personal injury or wrongful death. However, the ins and outs of structured settlements can become quite complex.
What are structured settlements?
Structured settlements are possible results of lawsuits that are aroused from various situations. Common lawsuits that involve structured settlements would be personal death, wrongful death and or medical malpractice. When companies such as insurance companies are responsible for paying out an award for these lawsuits, they will use a structured settlement as a way to pay the award money gradually over an extended period of time instead of all at once.
Periodic or lump sum payments
The factors that influence the choice of payment
To make an example of the above mentioned would be to say that an insurance company awards a settlement, but before they do so they will look at a few different factors when assigning the payment method as well as the size of the payments. It will depend on the following.
2. Current financial situation
3. Medical bills
4. Possible future costs
5. The difference between guaranteed and life contingent payments
6. Guaranteed payments
Structured Settlement Meaning
What this means is that the payments will only be extended until a certain point in the recipient’s life. This kind of payment can be assigned a beneficiary such as a family member or estate of your choice whom you want the payments to be made out to in the event that your life has carried on to the next.
Life contingent payments
Life contingent payments are decided upon by an insurance company’s analysis of the recipient’s situation and only become life contingent upon a certain date set out by the insurance company.
The important thing to remember is that life contingent payments cannot be assigned to a beneficiary. They can only be paid out to the recipient of the structured settlement.
How are structured settlements processed?
This process of acquiring a structured settlement can become tedious and complicated, however put simply it can be followed as such. In a court case there will be the plaintiff and the defendant. The defendant is to owe the plaintiff a said amount of money. This is resolved on account that both parties decide on the settlement cash being paid over an interval of time instead of paying an immediate lump sum.
The decisions made are upon the agreement of both parties involved, however the plaintiff’s needs are prioritized over that of the defendant. The negotiations need to be mediated by a professional. This is where we come in and offer our professional consultancy services.
After the decisions have been finalised the hired mediator will buy an annuity from a life insurance company. An investment of this kind is not vulnerable to market changes, recessions or similar risk factors.
Therefore the plaintiff can rest assured that the money paid out to them will be paid uninterruptedly.