Four Common Ways Structured Settlements Are Paid Out

Sell my annuity

In many cases, people who have suffered a personal injury will be offered a settlement to resolve any lawsuits they brought against whatever party was liable for the injury. These typically work well because there are tax benefits on the settlement for the injured party (who is also compensated in the form of the settlement), and the defendant and her liability insurer can save between 10% and 30% by offering a structured settlement. Here are four of the main ways that settlements are paid out.

Large Initial Lump Sum
One of the most typical ways that a settlement is paid out is with a structured settlement lump sum. This means that the claimant receives a large amount of the settlement at once. This may be a good option for people who were severely injured or disabled as the result of a personal injury and have a large amount of debt to cover.

Delayed Until Retirement
Another way that structured settlement cash is paid out is on a delayed schedule. This means that the recipient of the settlement does not receive any structured settlement money until a later date. In some cases, people choose to wait until retirement before the settlement starts paying out to help them manage their finances after they stop working.

Decrease the Payments Over Time
In some cases, settlement annuity payments are set to decrease over time. This might work in the case of an injured person who needs time for their injuries to heal before being able to go back to work. By the time they are able to make money through other means, the settlement payment amounts will decrease.

Increase the Payments Over Time
Otherwise, structured settlement cash payments are set to increase over time. This might be ideal for someone who expects to have greater expenses in the years to come but is otherwise financially stable. For example, a person who has a young child may need to depend on higher structured settlement payments to cover college expenses in later years.

The problem with structured settlement agreements is that they typically cannot be changed without the involvement of another party. If you’re interested in selling your structured settlement to an outside party, make sure that you do your research and choose a company wisely.

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