Structured Settlements or Lump Sums - What Works Best For You

Do you know that you can benefit from the damages that you receive from the personal injury lawsuit that you won? A settlement is a type of investment that takes the money given as damages and invest it into other investment portfolio. The damages are not given one-time, as the cash is roll out and the plaintiff receives it given certain time. For those who are permanently damage from their injury, structured settlement can help them pay off their debts and financial obligations.

Structured Settlement Cover

Structured settlement applies to different cases, which includes personal injuries. It also applies to medical malpractices and compensation for workers. Medical malpractices that cause permanent disability, sexual harassment and property loss are some of the cases that are eligible for structured settlement.

What are the Advantages of Structured Settlement?

The best benefit that one can have with structured income is that they have a steady source of income which they can receive yearly. The settlement is also tax free so one can earn more and remains so as long as it is handle by a fund manager or an insurance company.  With the settlement being handled by professionals, the injured party would not be able to spend all the funds and thus have available cash to cover medical expenses, rehabilitation and payments of debts and other obligations.

What Makes Structured Settlement A Financial Disadvantage?

One of the disadvantage of structured settlement is that the payout is affected by the economic changes in the market such as recession or inflation.  Which is why the payout might vary yearly.  Another is when the insurance company is readily affected by the market and as such might end up defaulting and not being able to pay its obligations.

Should One Consider Lump Sum or Structured Settlement Annuity?

Damages are given to plaintiffs when the case is won. Those damages maybe received as a lump sum or as structured settlement. Lump sum works by giving the person the entire amount and ends the obligation of the defendant. With structured settlement, the damages or cash is use to purchased annuities and earnings are given to the plaintiff yearly or depending on the period specified. The company who holds the annuity will roll out payments in installments and can run for several years for those who want to sell annuity payment. Lump sum are ideal if one wants to invest the cash into stocks or trading.

The cash is also tax-free so one is left with more money than a structured one. Some find this ideal as they can invest the amount or spend it any time they want. However, this is not ideal for individuals who have little to no self-control as they might use up the entire amount and left them with nothing to pay their obligations.  All earnings from structured settlements are tax free when they are left with third party companies. This also ensures that the individual have enough to cover their bills in the end.

Now, are you asking “how to sell structured settlements”? Follow the link for more details.