Structured Insurance Settlement

Ordinarily, when you win a judgment or settle a lawsuit the defendant has to pay you the judgment or settlement amount in either a lump sum or through a structured insurance settlement. A structured insurance settlement pays you in installments over time instead of a single lump sum. As the plaintiff, you and your attorney have the option of choosing to receive either the lump sum or the installment payments.

When faced with the decision about accepting a structured settlement, there are a few things to consider. Installment payments can be structured in a number of ways to suit your needs and to protect you from inflation. They can range from a simple yearly payment to complex arrangements consisting of an initial lump sum payment, monthly indexed installments, deferred payments, and special provisions relating to the future care or death of the insured.

There are several advantages to a structured insurance settlement. First, the money received from a structured insurance settlement is not taxed by the IRS. Second, when you receive money over a period of time, instead of in one large lump sum, you usually have less problems with family and close friends constantly trying to borrow money. Third, recipients of structured settlements can use their money to pay for their day-to-day expenses.

There are some disadvantages, however, that you need to be aware of. First, once you agree to a structured settlement, you cannot change it at some later date. Hence, it’s very important to be represented by a good attorney and tax advisor who will help negotiate structured settlement terms that meet your needs, such as protection from rising inflation.

In addition to considering the advantages and disadvantages listed above, it’s also important to know yourself and your current and future needs when making a decision about structured settlements. Are you the kind of person who would head to Vegas, do a little world travel, buy lots of toys, and basically blow your money until you have nothing left of your million dollars in a year or two? If so, a structured settlement might be the way to go so you can have some assistance in protecting your settlement proceeds.

If after consideration and the advice of a tax professional and attorney, you decide to choose a structured settlement you can rest assured knowing you do have options. People who receive structured settlement payments can decide at some point during the life of the settlement that they need more money in the short term rather than periodic payments over time. In this case, some people opt for a structured settlement factoring transaction. With this type of transaction the structured settlement recipient can sell all or part of their future periodic payments for a present lump sum.