An Insight to Structured Settlements
November 2, 2016

Structured Settlements:

One may find the process of a structured settlement a difficult one but for someone who wins a case, it provides them with a simpler and easier solution. According to National Structured Settlements Trade Association, nearly $6 billion is issued each year in new structured settlement funding. In regard to personal injury or wrongful death cases, settlement cash has proven to be an ideal solution. Structured settlements, as the name itself suggests, are tailored according to the needs of a person and the amount that is to be awarded to that individual. Cash for structured settlements happen to be a great plan in terms of a lifetime financial security in case of some emergency or tragedy. And if financial needs or unforeseen circumstances change, one also has the availability of accessing the money quickly. If a plaintiff is determined to receive money in a court proceeding instead of a lump sum, settlement cash could be considered, and both of the sides (with the help of a trained consultant) can come to terms regarding of the amount of money and the plaintiff’s needs. The person harmed (plaintiff) receives a scheduled series of payments for a set time period.

Cases Resulting in Structured Settlements:

  • Wrongful Death: When a court decides someone is at fault, the survivors of the victim are awarded a structured settlement. 
  • Workers Compensation Cases: If you get into an accident or face an injury at work, the court could award you an amount as a structured settlement to pay for the damages.
  • Severe Personal Injury: According to research, injuries that are more serious will likely be awarded in a structured settlement form – rather than a lump sum initially.
Structured settlement funding is the arrangement which provides a person with periodic payments over the course of a specified time period, or over the course of the person’s life. Structured settlements tend to be particularly helpful in cases when the plaintiff suffers a permanent injury of serious nature which is called catastrophic injury. The insurer of defendant usually funds the annuity policy for the plaintiff and, this way, a continuous stream of income over the term is produced by the annuity in the form of structured settlement. Courts use the structured settlement option in numerous different types of cases in order to replace the supplement income that was lost due to the fault of someone else. As they are conducted by the involvement of a third party, it also implies that someone does not have to associate directly with the entity or person that wronged them.

Pros of Structured Settlements:

  • With cash for structured settlements, the plaintiffs are provided with a certainty of payments over a fixed time period. But lump sum payments are suitable for cases that involve minors as are they enable long-term investing or those suffering from a serious injury which requires medical expenses in the futures.
  • Annuities can be tailored by the parties to cover the specific needs of the plaintiff and all kinds of future demands and contingencies.
  • Settlement cash could be combined with a lump-sum amount to meet the immediate expenses that may arise like repayment debts, medical bills, rehabilitation costs and similar costs.
  • Structured settlement funding allows the plaintiff to reap off tax benefit. Under the US Tax Code, personal injury settlements are considered tax-free. However, some exceptions do apply and could result in making some parts of the settlement taxable like an award of punitive damages or interest accruing on the settlements.
  • Annuities are covered by state insurance laws in most states that guarantee covering the obligations of an insurer.
  • With structured settlement funding, parties are able to reach an agreement that is acceptable to both the defendant and plaintiff. It helps the parties who are way behind in settlement negotiations.

Cons of Structured Settlements: 

  • Some parts of the settlement could be taxed that includes attorney’s fees, punitive damages, or emotional damages that do not stem from physical injury.
  • It might be a cause of tension and stress for the plaintiff that how the negative economic conditions like recession or inflation could make the annuity payments small even if it protects against these unfavorable economic conditions.
  • Some insurance companies have been hesitant in disclosing how much amount of payment they would have to pay for buying an annuity that covers the amount of structured settlement funding in the past years.
  • A structured settlement usually costs less to the insurance companies than the amount it would take for making a lump sum settlement. Without this information, the attorney of the plaintiff would not have been able to precisely assess the drawbacks and benefits of a settlement offer.
Now most states like New York and Florida happen to have a disclosure law known as Structured Settlement Protection Act (SSPA). These laws require the involved insurers to be upfront regarding their costs. Contact We Pay More Funding for further information.


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