Structured Settlement
What Does Structured Settlement Mean?
A structured settlement, in the context of insurance, is an agreement in which the claimant or injured party receives compensation for damages through periodic payments instead of a single lump sum. The insurer of the at-fault party generally funds a structured settlement annuity for the injured individual.
Insuranceopedia Explains Structured Settlement
Many recipients of lump-sum settlements tend to exhaust the funds within five years, sometimes resulting in the need for government assistance. In contrast, a structured settlement can serve as a safety net, offering long-term financial security. Structured settlement annuities can also be customized to address the injured party’s short- and long-term needs. For example, they can mimic a regular paycheck or be scheduled to align with anticipated expenses, such as upcoming bills, education costs, or retirement. Additionally, accepting a settlement often provides a faster, less costly, and less stressful alternative to going to trial. However, consulting an experienced personal injury attorney is essential to determine if a structured settlement is the most suitable option.
