Structured Settlement: Some Basics


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In basic terms, a structured settlement is an action taken by an Insurance Company under agreement with the plaintiff, the plaintiffs lawyer and a financial advisor to arrange for periodic payments of a large sum of cash that was awarded to the plaintiff as part of a bodily injury claim or law suit. This same agreement can also be established for surviving members of the family. Regular installments can be paid over the lifetime of the injured party or for a set time period.

These types of settlements have become very popular in the legal system of today. All parties involved in these types of settlements can benefit greatly and this has contributed to their popularity. Payments are established on a recurring basis and in some cases a small lump sum portion can be distributed for coverage of financial obligations upfront.

There are a few benefits to structured settlement annuities. There may be a period of time where the installments could be tax-free. There are many investment options available but most do not stack up to the advantages of a Structured Settlement Annuity. Beneficiaries can be established to receive a portion of the settlement in case of the untimely death of the plaintiff. If you have recurring medical bills every month then structured Settlement Annuities will benefit you due to the establishment of the monthly income. Structured Settlements can protect you from you. It is very difficult for people to refuse to give cash to family members and if your settlement is distributed monthly it is much easier for you to just say ‘no’ due to your monthly obligations. Special trust funds can also be established for those who were severely disabled from the accident and in these cases a qualified financial advisor should be consulted.

The Lump Sum Alternative

Periodic payments can make many recipients feel caged. They may have been planning to use the money for school tuition, new home, new car, home renovation etc. etc. The lump sum alternative may be what they desire. If you are a disciplined individual and can manage your money effortlessly then this could benefit you immensely. With enough research you could find many long-term investments with much greater returns than an annuity. You have to remember, if the sum of the settlement is extremely large then you will need to negotiate to see if you can get some of that cash up-front with the rest in periodic installments. If you have been receiving monthly installments for quite some time and decide you need more cash available then you may desire to sell your settlement. There are brokers working with factoring companies that would be willing to purchase your annuity, just be smart, do your research and make sure you work with a reputable company or individual. On another note you will need to check your states laws on structured settlements. Some states do not allow the sale of a structured settlement.

Which ever course you decide to take, make sure that you consult a reputable Lawyer and Financial Advisor. The benefits could be immeasurable and you could relax knowing you made the right choice and that you will be happy with your decision for the rest of your life.

About the Author: Ken Conger is a freelance writer and webmaster for Smart Annuity Information


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