Who receives the money in a structured settlement?
Structured settlements are meant to provide long-term financial security to the claimant. Lump sum recoveries were common in personal injury cases. But then there is always the daunting task of managing large funds along with living and medical expenses for the claimant. Structured settlements overcome this obstacle by arriving at a voluntary agreement between the claimant and the defendant. Structured settlements not only resolved tort claims faster but also provided the claimant the benefit of long-term financial security.
Who can consider a structured settlement?
A person who has encountered severe personal injury due to someone else's fault is entitled to claim settlements against the individual or the company or the insurer who provides the compensation. Payment can be lump sum or in the form of a structured settlement. Structured settlements are arranged before the personal injury case has been resolved and not after a resolution has been passed by the court. A court may also order lump sum compensation as its final judgment.
Conditions under which a structured settlement can be claimed
- Personal injury is the only case where the injured can claim a structured settlement
- Claim for compensation cannot arise out of the death of another person
- A legal personal representative or the injured person has to make the claim
- A written agreement is signed for the settlement
- The defendant may use all or some of the compensation or damages to purchase annuities that have to be paid by the claimant or the legal personal representative
Qualified cases and conditions for a structured settlement
A workers' compensation claim cannot be made available as a structured settlement. Personal injuries arising due to medical negligence, motor vehicle accident, product or public liability are cases that are entitled to structured settlements.
Components to a structured settlement
Compulsory component
The structured settlement should include personal injury annuity(s) that will provide minimum levels of monthly payments for a lifetime. Life insurance companies usually provide annuities as a financial product. It is compulsory to include the personal injury component in a structured settlement.
Immediate cash component
Often, the structured settlement includes a cash component that is paid immediately to the injured person once the settlement has been arranged. Which means the injured person receives a lump sum immediately to pay for debts, costs incurred, investment purposes, to purchase equipment, etc. Though optional, this component is highly recommended because an individual usually requires money immediately after the injury.
Other personal injury annuities �?Personal injury annuities with flexible conditions can be combined with personal injury lump sums that are tax-free to be paid on future dates. These dates are also pre-determined during the settlement.