What is Structured Settlement: A Few Things You Should Know
If you have been involved in a personal injury case, and you have been awarded a settlement, it can be paid in installment over a spread of a certain period rather than being given in lump sum. This means that you will be receiving a certain amount regularly based on the frequency specified. This is what you call structured settlement. To know more about what is a structured settlement, keep on reading.
Benefits of Structured Settlements
In knowing what is a structured settlement, it is also necessary to know more about how it can be beneficial in more ways than one. Generally speaking, the following are some of its advantages:
- Tax Benefit: It is a good thing that the money that you will receive from structured settlements will not be subjected to taxation, unlike in the case of what you will receive in lump sum. This means that a greater amount goes directly to your pocket and not it tax payments.
- Steady Source of Income: Because of regular payments spread over a certain period, structured settlements is also beneficial in the sense that it provides you with guaranteed money to sustain your living. This will provide you with better control of your finances.
- Ability to Maximize Benefits: Another good thing about structured payments is that the benefits can continue for life, making it possible to get more than what you will have from lump sum payments. It should also be noted that it can be transferred to a designated beneficiary once the claimant dies while the settlement is still not done.
Should You Choose Structured Settlement?
Knowing what is a structured settlement also entails the need to learn about when it is necessary. Among other instances, structured settlement should be chosen if you have an unstable financial life. The regular payments will help you to sustain your financial obligations. It will also provide you with the guarantee that you will not be able to spend your money too fast. Since it is not yet in your possession, it will be easier to control where it goes.
Selling your Structured Settlement
For those who have been wondering about what is a structured settlement, another thing that should be noted is the fact that it can be sold at any given time. Let us say that you have initially opt for a structured settlement, but after a year or two, you have suffered from a serious accident. With expensive hospital bills, your structured settlement can be sold. Find a company that will purchase such. You will be given the cash that you need at once, but in turn, the buyer will be the one to receive all future settlements.
What is a Structured Settlement?
What is a structured settlement is a common question amongst people involved in personal injury claims. Generally, a structured settlement is awarded to the victim in a personal injury case, and it is through a special arrangement where a certain sum of money is paid periodically, rather than a lump sum amount. It is the most preferred method of settling personal injury cases and notably benefits from tax exemption. Find out more information about structured settlements here below.
3 Instances When You Could Receive Structured Settlements
What is a structured settlement in personal injury? Well, a person can receive a structured settlement payment in the event that they file a personal injury lawsuit. For instance, if the individual filing the lawsuit has incurred expenses such as medical bills, a structured settlement is designed to help pay off such expenses and other costs which might have resulted from the injury.
If a person, organization or entity is responsible for the death of an individual, structured settlement payments are designed to offer compensation for the wrongful death of their family member. Such a family, therefore, files a wrongful death lawsuit which will guarantee payments for their loss. In this case, what is a structured settlement acts as a replacement of the income that would have been brought by the deceased family member.
Workers compensation is also a reason why you should receive structured settlements. In the event that a worker/employee is injured during a work-related activity, the company which has employed such an employee is required to receive a worker’s compensation. Such compensations are part of what is a structured settlement and are designed to cater for expenses such as medical bills and income otherwise realized if the employee was working (wage replacement).
Benefits of Structured Settlements
- The best thing about structured settlement payments is that they are tax-free.
- If the recipient of the settlement payments dies, the next of kin (heir) stated in contract will continue receiving these payments.
- Structured settlements come in different payment options, deferred payments, where you receive your when you want in future, immediate payments as soon as the court orders payments to be made.
- Structured settlements reduce the risk of extravagant spending.
- Structured settlements are not subject to financial market fluctuations. The annuity insurance company is obligated to pay the settlements.
- Interests earned over time yield a higher payout and therefore structured settlements are more profitable.
If you have questions, enquiries or suggestions regarding what is a structured settlement feel free to consult us today and we will definitely get back to you promptly.