What are Structured Settlements?

What Are Structured Settlements

Did you know that about 23 million people owe medical debt? Without universal healthcare and a decent living wage, it’s hard for those in debt to make payments.

Debt is an endless cycle, but if you were injured by an individual or company, you might be entitled to compensation. To increase your financial security from a lawsuit, consider taking a structured settlement.

Keep reading to learn what this means.

What is a Structured Settlement?

A civil lawsuit might result in an individual or company paying money to someone else to right a wrong.

The responsible party can agree to a structured settlement on their own or be forced to pay the money if they lose a case in court.

If the amount of money is small, the wronged party might have the option to receive a lump sum settlement. For larger amounts, the court will arrange a structured settlement.

This means the at-fault party will put the money toward an annuity that guarantees regular payments over time. The agreement will include details about the series of payments.

A structured settlement spreads money over a longer time period to provide better financial security. This prevents a single payout from being spent too quickly.

How do Structured Settlements Work?

Structured settlement annuities are paid out periodically. The key difference between this form of payment and other settlement options is the benefit of long-term financial security and taxes.

Legal settlements paid out in a one-time lump sum are subject to taxes. Any interest and dividends earned from a structured settlement grow tax-free.

The defendant will agree to settle and release themselves from liability by funding the settlement. They assign liability to an assignment company.

This company assumes responsibility and makes payments to a life company to purchase an annuity. The life company pays benefits to the claimant.

Structured Settlement Payout Options

If you receive your lawsuit through a structured settlement, you can decide when to receive the funds. Immediate payments are beneficial if you lose your source of income or need to pay medical bills.

You can also decide to postpone payments until a later date. While you wait, the annuity grows as it earns interest.


You’ll also be able to determine whether the annuity gets paid out for the rest of your life or for a specific number of years. You dictate the scheduling of payments.

Can you Sell Structured Settlements?

Consider the terms of your payout carefully because you cannot renegotiate the contract. If your financial situation were to change in the future, this can limit your options.

You can get a cash advance on payments if you choose to sell structured settlements. Owners might sell some or all of their payments to companies like https://www.wepaymorefunding.com/.

Before the sale is complete, you have to go through a court process to ensure a company has your best interest in mind.

Managing a Structured Settlement

If you have the option of receiving a structured settlement, you’ll benefit from long-term financial stability.

However, it’s important to understand the terms of your payments. Your contract should reflect what is best for your financial needs because you cannot edit it later.

If an emergency were to occur, you do have the option of selling all or some of your payments for a lump sum amount.

For more informative financial blogs like this, check out the other posts on our website.

What are Structured Settlements?
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