Structured settlements are a financial planning tool that can provide injured victims with a guaranteed stream of income over time. Instead of receiving a lump sum payment, the victim receives a series of periodic payments, which can be tailored to meet their specific needs.

Structured settlements are often used in personal injury cases, but they can also be used in other types of settlements, such as wrongful death and workers’ compensation cases.

Benefits of Structured Settlements

Structured settlements offer a number of benefits to injury victims, including:

• Guaranteed income: Structured settlements provide a guaranteed stream of income over time, which can help to ensure that the victim has the financial resources they need to cover their future needs.
• Tax-free payments: Structured settlement payments are generally tax-free, which can save the victim a significant amount of money over the life of the settlement.
• Asset protection: Structured settlements are protected from creditors and bankruptcy, which can help to ensure that the victim’s financial future is secure.
• Flexibility: Structured settlements can be structured to meet the specific needs of the victim. For example, payments can be increased or decreased over time, or they can be stopped altogether if the victim’s needs change.

How Structured Settlements Work

Structured settlements are created through a contract between the victim and the defendant or their insurance company. The contract specifies the terms of the settlement, including the amount of money to be paid, the frequency of payments, and the duration of the settlement.

Once the contract is signed, the defendant or their insurance company purchases an annuity from a life insurance company. The annuity is designed to generate payments to the victim according to the terms of the settlement contract.

Who Should Consider a Structured Settlement?

Structured settlements may be a good option for injury victims who:

• Have significant future medical expenses
• Are unable to work due to their injuries
• Have dependents who rely on them for financial support
• Are concerned about managing a large lump sum payment