Did you know that more than a third of personal injury claimants are offered a structured settlement of some kind? This is because structured settlements are becoming more widely accepted as a form of payment. These settlements are mostly used in defective product liability cases or personal injury cases.
Specifically, structured settlement cash arrives after a claimant agrees to solve a personal injury claim by receiving payments at specific monthly or yearly increments. An annuity structured settlement is one that pays a claimant not a structured settlement lump sum, but instead a monthly allowance or income.
An annuity structured settlement has many benefits: On the defendants side, they and their liability insurers can often save between 10 and 30% by using a structured settlement instead of a lump sum. On the claimant’s side, they will be able to better manage the money they’ve earned from their injury by receiving structured settlement money in smaller chunks.
These type of settlements work just like annuities. Fixed annuities are an insurance product that pays out monthly checks to those who purchase the product. The individual will receive these checks for as long as they live (assuming they won’t sell the annuity). If they were to sell a few payments, the pay will be adjusted to ensure that the owner still receives a check. An annuity structured settlement works the same way; owners can put their settlement money into more than one annuity that guarantees them an income for life.
These insurance products can help individuals pay off medical expenses such as surgeries or medications that accumulated as a result of their accident or injury, they can pay for any work that was missed (it would be like receiving paid time off), or can be used for putting children through college or making a home improvement.
In a large study of nearly 1,750 bodily injury claims, 12% results in structured settlements. These insurance packages have been endorsed by the majority of America’s disability rights organizations because they offer a great way to help claimants get their life back on track after an accident.
The use of structured settlements was no always apparent a few decades ago, although evidence of these financial products was found in ancient Rome. In 1982, Congress adopted certain tax rules that helped the American people use structured settlements more to their advantage. They provided long-term financial security for those who were often unable to return to work.
Just like an annuity, an annuity structured settlement can be sold if the claimant needs immediate cash. They will need to find an insurance company that purchases settlements and/or annuities, though people should make sure to do their research about what companies offer the best deals. Sometimes selling a settlement can result in a significant loss of the settlement’s net worth. However, if someone needs cash now, it is a better option than taking out a loan. Learn more.
