Financial Security through Structured Payment Settlement

Structured settlements have become a natural part of personal injury and workers' compensation claims in the United States, according to the National Association of Trade Structured Settlements (NSSTA). In 2001, life insurance members of NSSTA wrote more than $ 6.05 billion annuity issued in payment of claims for personal injury. This is an increase of 19 percent compared to 2000.

A structured settlement is the dispersement of money for a lawsuit of all or part of these provisions require future periodic payments. The money is repaid monthly, half-yearly or quarterly, or for a fixed or for the lives of ordinary service life. 

Depending on individual needs, the structure may also include immediate payment to cover special damages. " Payment settlement " is usually made by purchasing an annuity from a life insurance company.

The structure of a structured settlement can provide financial security for the long-term injury victims and their families through a series of tax-free payments tailored to their needs. 

Historically, they were used for the first time in Canada and the United States during the 1970s as an alternative to lump sum payments were injured. A structured payment settlement can also be used in situations involving lottery winnings and other major funds.

How a structured settlement works when applicants apply for a large amount of money, the defendant, the plaintiff's attorney, or financial planner may propose paying the settlement in installments rather than all at once.

A structured payment  settlement is a compromise. People who have been injured and / or their parents or guardians work with their lawyer and an outside agent to determine the need for future medical and life. 

This includes all upcoming operations, therapy, medical equipment and other needs of health care. Then, an annuity is purchased and owned by an independent third party to make payments to the injured person. Unlike dividends or bank interest payments are tax-free structured settlement entirely. In addition, individual annuities grow tax-free.

Advantages and Disadvantages - As with everything, there are positive and negative sides of the agency arrangement. An important advantage is tax evasion. When properly adjusted the structured settlement may significantly reduce prospective tax liability (as a result of the transaction). 

Another advantage is that a structured settlement can help to ensure the applicant has sufficient funds to pay for future care or needs. In other words, a structured settlement can help protect a plaintiff from himself.

Let's face it: some people have trouble managing our money, or say no to family and friends who want to "share the wealth" Receiving money in installments can last longer ..

The weakness of structured settlements is an integrated structure (no pun intended). Some people may feel limited by periodic payments. For example, you may want to buy a new or other expensive items in the home, however, does not have the funds to do so. 

They can not borrow against future payments under their settlement, so they are stuck until the next payment arrives. And investment standpoint, a structured settlement may not make more sense for everyone. Many standard investments can provide long term benefits are greater.

" A payment settlement is a compromise "