The Defendant Wants to Pay You in a Structured Settlement…What is That?

Imagine that your case is in litigation, and you get a call from your attorney. The other side wants to settle and perhaps, wants to offer you an amount that seems like fair compensation. But they want a structured settlement. What exactly is that, and should you accept it?

Payment Over Time

A structured settlement is a settlement that is not paid out all at one time, but rather, is put into an investment vehicle, commonly some type of annuity, but it may be other kinds of financial vehicles that may be similar. These financial vehicles will pay you a given set amount, periodically, yearly or monthly, over a period of time.

Benefits to Structured Settlements

Why would you ever accept that? The answer is that because commonly, the Defendant or insurance company may be willing to offer you more money, if it is in the form of a structured settlement, because that means that the insurance company has to lay out fewer hard dollars all at once. Like any investment, the value grows over time because of interest.

The insurance company gets the benefit of laying out fewer dollars, meaning a larger settlement, while you get the value of that larger settlement, even though you cannot access it all at once (at least, not without a penalty).

Structured settlements may be great for you, depending on your situation. If you are younger, and the settlement will pay you a monthly or yearly amount that will benefit you, it may be a good bet to take the structured settlement.

Even if you are older, and are worried you won’t be around long enough to collect the entirety of the settlement, you can leave your structured settlement in an estate planning vehicle, ensuring that your loved ones or next of kin, continue to collect after you are gone.

Selling the Settlement

You do have the option of selling your settlement later on (there are companies that purchase things like life insurance policies or structured settlements) and give you a lump sum cash payment, although that’s usually for less than the face value of the policy or settlement. Still, it is an option, if money ever becomes very tight for you later on.

Getting Financial Assistance

Annuities and structured settlements are generally very safe vehicles; they aren’t going to change much even if the stock market does, and you don’t have to worry about anybody going bankrupt and not getting paid.

If the insurance company is open to a structured settlement, you can bring on the help of a financial advisor before you settle, so that he or she can discuss with you what you can get paid and when, penalties for early liquidation, and answer any other financial questions that you may have.

You also may have the option of a hybrid settlement, where some of the settlement is paid up front, immediately, while the rest is paid through the settlement over a term of years.

What are your chances of getting compensation for your injuries? We can explain the legal system so it’s clear to you. Schedule a consultation with our Tampa personal injury lawyers at Barbas, Nunez, Sanders, Butler & Hovsepian today for help.

Source:

annuity.org/structured-settlements/