If you’ve been offered a structured settlement or already have one, you probably already know how confusing they can be. Here are a few answers to basic questions about structured settlements to get you started:
What is a structured settlement?
To better understand what structured settlement means, you need to understand what a settlement is and what the structuring of it refers to. A settlement is a financial agreement between two parties — typically an individual and an insurance company. In cases like these, the individual has typically suffered some sort of injury or loss that the insurer of another party (like a business or individual) pays compensation for. This monetary sum is usually structured — or broken up into periodic payments.
What circumstances are they used in?
Structured settlements are usually used in cases of personal injury or product liability. In fact, more than a third of personal injury claimants are offered a structured settlement, likely because that option saves the defendant and their insurer between ten and 30%.
Should I sell my structure settlement?
Though settlements are typically structured, you aren’t required to keep receiving the settlement in that form. Selling your structured settlement is an option. This usually involves an outside company buying the structured settlement money. If you do choose to sell structured settlement payments, the lump sum that the company will pay you is generally less than the full amount of the settlement. The benefit is that you would have access the structured settlement cash that you receive from the outside.
Chances are, if you suffer a personal injury you’re going to be offered a structured settlement. If you are, know that this is a really common way to resolve personal injury claims, that the compensation you are awarded will come in periodic payments, and that you do have the option to sell and get a lump sum of structured settlement cash if you choose.
Do you have any more questions about structured settlements? Let us know in the comments.
