A structured settlement is a periodic payment plan that is agreed upon between a plaintiff and defendant. It is used in many cases where the plaintiff is awarded a large sum of money.

Instead of receiving the compensation in a lump sum payment, the payments are spread out over a period of time that is decided upon beforehand.

In cases involving personal injury, a structured settlement is especially helpful. If the plaintiff is temporarily or permanently unable to work, a structured settlement provides them with a sense of financial security. The claimant will have a steady source of income which makes financial planning much easier.

Understanding the components of a structured settlement is the key to understanding how you will be paid and on what schedule.

While a structured settlement need only have one component, that which provides for the payout over the life of the structured settlement, most structured settlements have several different components, differing in the amount, the schedule you receive payment on, and the life of payout.

Understanding the components and how they work are very important in terms of maximizing your payout.

All structured settlements include one component that provides for a certain amount of money over the course of the payout. The payout terms are highly variable. Some structured settlements pay for the life of the plaintiff while other structured settlements only pay for a set number of years.

This is usually dependent upon the extent of the injury and what the judge and/or jury, depending on your jurisdiction, feel that the plaintiff is entitled to, based on the extent of the injury suffered.

The following information has been compiled to help those who may be considering a structured settlement plan or individuals seeking information on the topic of structured settlements.
What is a Structured Settlement?
How are Structured Settlements Taxed?
Structured Settlements: How long will I receive payments?
How much money is enough for a structured settlement?
What Is A Structured Order?
When Can I Get A Structured Settlement?
Who Should Consider a Structured Settlement?
Who should I talk to about structured settlements?
What are the benefits of a structured settlement?

Q: What is a Structured Settlement?

A: A structured settlement is a periodic payment plan that is agreed upon between a plaintiff and defendant. It is used in many cases where the plaintiff is awarded a large sum of money. Instead of receiving the compensation in a lump sum payment, the payments are spread out over a period of time that is decided upon beforehand.

In cases involving personal injury, a structured settlement is especially helpful. If the plaintiff is temporarily or permanently unable to work, a structured settlement provides them with a sense of financial security. The claimant will have a steady source of income which makes financial planning much easier. Another good reason for choosing a structured settlement is the tax benefits they have to offer.

A structured settlement is an agreement under which one gets paid over a specified period of time instead of a single lump sum in exchange for a release of claim or liability. Such liabilities may arise out of personal injury or other forms of claim such as workers’ compensation.

The payments can be made on monthly or yearly basis, or can even be spread over a recipient’s lifetime. More often than not such settlements include an immediate cash payment and are set up as an annuity usually orchestrated by reliable insurance companies.

However, a variety of compelling reasons like medical expenses or financial emergency may force recipients to sell their structured settlement payments because they need immediate cash and are in no position to wait out the terms of their settlement.

A structured settlement is a pact under which instead of a single lump sum, payments are made over a specified time in exchange for a release of liability. These liabilities may arise out of personal injury or other forms of compensation claim.

Depending on the nature, structured settlements can be spread over a person’s lifetime, or just over a few years. Most of such settlements include an immediate cash payment and are set up as an annuity generally orchestrated by insurance companies.

However, despite the attractive initial payment plan, a financial emergency, unforeseen medical expenses, or other compelling reasons can force many people to rethink the need for future payments.

A structured settlement broker will help anyone who has a large cash award settlement that he or she wishes to sell. Many times payment awards given through the courts are broken up over years but in cases where a lump sum payment would be beneficial the full award is often given. It can often be a very daunting task when suddenly faced with a huge sum of money in making the right choices; this is where a settlement broker can help.

What Does The Structured Settlement Broker Do?

The Structured settlement broker will buy the original contract with the courts approval and pay the seller with a large cash sum. The broker can help a person to get the best deal from the settlement award, but be careful when choosing a broker as some are less than ethical and do not have the expertise in getting you the best deal.

The qualified broker will know many different options that are available for you of which may include temporary annuities, designated annuities, lump sum payoffs and contingent awards.

Use our free online structured settlement calculator below to work out the value of your lump sum settlement and the interest expected to pay on the investment.

Here we have compiled a glossary of terms covering both structured settlements and annuities to give you a comprehensive understanding of those components.

Annuitant

The term used to describe the annuity contract holder, i.e., the person who buys the annuity.

Annuity

A contract between a client and an insurance company where the client receives periodical settlement payments for a specified length of time.

Annuity with compounding benefits

An annuity where a fixed percentage of increase is added to each year of payment.

An annuity quite simply put is an investment; they are bought from insurance companies usually from pension funds. It is a one way of turning a lump sum of money into an income that is guaranteed for the rest of your life.

Legislation states that most people between the ages of 50 and 75 must buy an annuity along with there personal pension. The amount of income you receive each year for your lump sum is based on the annuity rate, the amount you in your pension fund, your health, sex and age when purchasing the annuity.

The income will also take into account whether it’s just for you or if there is a partner involved. Also the older you are the higher the income will be for an older person will have fewer years than a younger one to live.

There are many reasons why you may want to sell your structured settlement. Perhaps you need to raise cash for a down payment on a house or to fund a child’s education. Perhaps you are the heir to an estate that includes payments on a structured settlement and you and the other heirs would prefer a lump sum of cash to pay for expenses rather than a monthly check.

Whatever your personal reason for wanting to sell your annuities, the transference of your structured settlement, and thus the ability to sell your structured settlement, is governed by law. This isn’t just a case of transferring a deed to a car to a new buyer or of transferring your property, a judge actually has to look over the document and approve the sale of your structured settlement.

Because of the entanglements with the judicial system, you can expect the sale of your structured settlement to take 2-3 months. If you expect you will need the cash soon, then you should get started on it immediately. Many companies buy and sell structured settlements, but any who claim that they can have it done in just a few weeks is probably lying.