Structured Settlement: What Is It And How It Works

When a plaintiff wins or accepts a settlement during their personal injury case there are two ways they can accept the payments. The first option is to get all the money in a one lump sum and the second option is to receive the payment in a series over a certain period of time until the amount is paid in full. The first option is what many plaintiffs choose, but the second option, which is also called a structured settlement, also has its benefits.

There are different factors that can influence someone’s choice when it comes to how they want their winnings to be paid. Here is all you need to know about the second option:

How The Structured Option Works

Plaintiffs who agree to take their winnings through a structured option are usually those who prefer to receive their money periodically. This is better for those who want to manage their money and not overspend their winning in a short period of time. With this kind of payment scheme you have the option to customize how much money you receive. Here are the different schemes and the situations they are best used for:

Large First Payment – This option is when a plaintiff chooses to receive a large amount during the first payment. This is best for those who have outstanding bills because they have been unemployed for a while. The large initial payment can cover overdue bills to relieve the burden and the rest of the winnings can be divided into smaller amounts that will compensate as a salary.

Considers Extraordinary Expenses – There are some settlements that are used to compensate for the yearly income. There are additional amounts added to the scheduled payments to cover “extraordinary expenses” like school tuitions.

Increasing Payments – There are certain structures of settlements that are designed to give an increasing amount over the years. The first payments start out low and the last payments are higher. This is perfect for those who want to account for inflation in the years to come.

Decreasing Payments – The opposite of the previously mentioned structure is when the payments first start out in large amounts and decrease overtime. This kind of structure is best for people who are confident that they will eventually get another source of income in the future. Those who have not been severely incapacitated from their previous injuries are those who can benefit from this form of settlement.

Delayed Payments – There are a few plaintiffs who prefer to delay their payments until they retire as their form of retirement fund. This is best for those who do not want to worry about their financial security during their golden age.

Each type of structured settlement has its benefits and we cover such topics at Choosing the right kind can affect your financial status in the future. Speak to experts on the field to determine which of the different structures will work best for your current and future situations. Getting the opinion of experts will increase the chances of you spending your winnings wisely and even using them for years to come.

You can read more about structured settlements at
No clue what a structured settlement is and how it works? Find out more at where we cover the basics and some more to help you.

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