Before the 1980's when structured settlements became common, people who were rewarded a settlement would typically get a lump sum amount... meaning they would have all their money at once.
Example: If you were injured at work and received a $100,000.00 settlement, you would get the whole amount up front.
It didn't take long before the "system" (meaning courts, involved companies and people) realized a big problem with this... settlement recipients would spend all their money very quickly and still be in need for more!
A structured settlement is simply a break down of your settlement amount into periodic payments.
Example: If after an accident you are awarded a $100,000.00 settlement, you might receive $10,000.00 per year for 10 years.
That's basically what a structured settlement is.
Of course, depending on your settlement you might be guaranteed payments for months, years or your whole life!
Do Structured Settlements Apply To Anyone And Everyone?
Structured settlements were really just created for injury cases - both at work, on the road, or at home.
Let's not forget the most *important* benefit: The money you receive each month from your structured settlement is absolutely tax free!
You see, the government wants to encourage their use because it saves our country money in the long run. (Otherwise more people would need public aid because they spent all their settlement money!)
The amount of the payments and pay periods are completely negotiable for both parties (usually the victim and insurance company) to decide.
Keep in mind: This negotiation phase is the perfect time to be smart and think ahead of how you should best structure the payments... make sure you have expert lawyers and financial planners to help you.