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Structured Settlements Are Payments Made To An Injured Consumer By The Insurance Company From Where The Person Has Bought His Policy. In Other Words, The Person Is Prohibited From Receiving Payments In One Lump Sum. Welcome To SettlementInfo.net. As
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Structured Settlements Offer Advantages over Lump-Sum Payments
Author: Charles Essmeier
A structured settlement, which offers injury victims cash payments through a long-term annuity as compensation for their damages and medical expenses, offer a number of possible advantages over payment in a lump sum. While the lump sum payment is the traditional way for responsible parties to pay accident claims, the structured settlement offers payments over the span of an agreed-upon period of time. This length of time may span from several years up to the remainder of the life of the injured party, depending on the severity of the accident, the amount of money involved, and the agreement reached between the two parties.
Depending on the specific circumstances of the case, structured settlements can have numerous advantages over a lump-sum payment:
They are tax free. Thanks to a 1982 change in the Federal tax code, payments on a structured settlement are free of state and Federal taxes. The paying party funds the settlement through the purchase of an annuity which earns the interest to fund the continued payments. This is not the case with a lump-sum payment, which the injured party must invest themselves. Any interest earned on those investments are taxable.
They are potentially safer. Most people who come into a large sum of money suddenly find that they are quite popular with long-lost relatives, unscrupulous purveyors of investment schemes, and good, old-fashioned thieves. By receiving payments in substantially smaller amounts, the beneficiaries of a structured settlement have far fewer worries about having others take advantage of them, which could leave them both poor and without adequate medical care.
They are simply less trouble. It’s difficult enough to adjust to changes in your life if you are seriously injured without having to also take the new responsibility of investing and managing a large sum of money. Not only must you invest the money, but you must invest it wisely, knowing that it must continue to fund your living and/or health care expenses. The regular payments of a structured settlement, along with their tax-free status, simplify day to day living considerably.
While they are not ideal for everyone, particularly those who are experienced investors or those who need a large sum of money at once for immediate medical expenses or the purchase of a home, structured settlements can offer a simpler, safer payment solution for many people who are victims of an accident or injury.
About the Author
©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including http://www.StructuredSettlementHelp.com/ and http://www.HomeEquityHelp.net/
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A Quick Note
From The Publisher...
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Understanding Structured Settlements and their Advantages |
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Put in simple terms, a structured settlement is merely an agreement that’s reached between a plaintiff and defendant that outlines the flow of payment that the plaintiff receives, due to injury. These payments – which are made over a specified period of time – do offer some advantages to the recipient and are advocated by many legal professionals, since they provide more benefits over time, when tax rates are factored in for consideration. When the payment system is set up, it can be customized according to the needs of the recipient and is issued through a stable financial institution. In cases where there will be ongoing medical expenses and/or living expenses that will be covered by such a settlement, it’s important to be comfortable with the experience and the history of success that the company offers. Among the many advantages of a structured settlement is the fact that the income that’s generated from this type of agreement is not included as part of the recipient’s annual... |
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