Structured settlements are a relatively new concept, as they only came into use in the 1980s. Since then, they have become the go-to solution for injured parties to receive their award payment. If you’ve never heard of this type of financial tool, then this article is just what you need. It will explain everything you need to know about structured settlements and how they work.
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What Is a Structured Settlement?
Sometimes a company or individual must pay an injured party settlement money to right a wrong. Sometimes, the two parties agree to settle outside of court and agree on an acceptable amount. Other times, the court orders them to pay a specific amount of money after ruling in the injured party’s favor during a trial.
If the amount of money is smaller, then the payment gets made in a single lump-sum amount. However, if the amount is larger, then the payments can get broken up into a structured settlement. This is a series of payments that are made over many months or years.
There are several common situations where a structured settlement is used.
- Personal injury
- Medical malpractice
- Wrongful death
- Workers’ compensation
How Does a Structured Settlement Work?
To set up a structured settlement, an annuity is created with the money owed put into it. Then periodic payments are made to the injured party. What’s nice about this is that you have the security of consistent future payments.
If you don’t have experience handling large amounts of money, this can help secure long-term financial security. The downside is that you don’t have access to the full value of your award right away.
When setting up your structured settlement, you can adjust the start date, end date, payment frequency, payment amount, and death benefits. But you’ll need to do this at the time of your settlement or lawsuit. You’re rarely able to go back later and change the terms of your settlement agreement.
What Can You Do With a Structured Settlement?
For many people, the structured settlement is the smart choice at the time of their lawsuit. However, several years later, they find that they need great financial assistance. This is when they contact a structured settlement purchaser, such as JG Wentworth.
With this process, you sell your rights to your structured settlement to get a percentage of the value right away. Then the purchaser takes over receiving payments. While this can be useful for accessing your money when you need it, there’s some risk.
Predatory companies will offer a low-value quote for your settlement. Then you end up receiving only a small portion of your original settlement award. Only agree to sell your structured settlement to a reputable and fair company.
Secure a Structured Settlement Today
If you’re currently pursuing a personal injury claim, then you may want to consider a structured settlement for your award. This will secure you consistent and ongoing payments without the fear of managing a large sum of money.
Browse our other articles for more helpful financial advice.