When should you go for a structured settlement?

Structured settlements are an option when an individual has been intentionally or unintentionally been injured either in an accident or as a malicious act carried out against the person. Either ways the claimant is entitled to compensation in the form of structured settlements from the entity that has caused the personal injury. The defendant can always choose a court trial to fight the charges. Structured settlements are an amicable way to resolve disputes especially when the defendant feels that they might be found responsible by the court of law.

There is a marked difference between structured settlements and lump sum awards.

• A structured settlement is spread over a number of years with a schedule drawn out to be paid periodically, either monthly or yearly. The defendant agrees to a fixed timetable of payments. Annuities from insurance companies ensure such payments on time.


• Lump sum payments will be awarded in just one go. Many claimants prefer this especially when they have a large investment such as property and education. Structured settlements are intended to provide for the future needs and contribute to a reliable source of income. When injuries are minor or moderate, it makes sense to go in for a lump sum amount.

For more serious and grave injuries, which might require long-term treatment, it is better to opt for a structured settlement. It best compensates the injured individual over a period of time rather than a huge payment all at once.

The structured settlement set up may not be entirely flexible as there is no predictability to life-changing events'. It is at this time that selling a structured settlement in exchange for a lump sum amount can provide an individual with valuable financial security and expand options for them and their families.

Selling a structured settlement is usually the last resort. Repairing a home, investing in a business, funding a college education, paying off debts, etc. are valid reasons for selling a structured settlement. It is essential to decide to sell, how much to sell and appear before a judge for approval of the request to acquire the cash. Discount rates are available from reputable financial companies to service the sale. Proving the legitimacy of their need is a criterion that has to be examined by the structured settlement holder. It takes about 60 days after signing the contract to receive the money, which will be wired by the insurance company. Structured settlement purchase transactions vary due to state laws that regulate the proceedings.

Selling structured settlements will help you save on foreclosures, make home repairs, repay huge hospital debts and allows you to decide investments. The Internal Revenue Code Section 104(a)(2) states that structured settlements are tax-free and the IRS ruled that when a claimant exchanges their periodic payments to be received under structured settlements against a lump sum, then the lump sum amount remains tax-free.

In conclusion, it totally depends on the individuals' requirement to either go in for a structured settlement or a lump sum or sell their structured settlements at a future date.