Structured Settlements – What You Need to Know

imgeA structured settlement is a financial or insurance provision where in the claimant, in case of a personal injury, will receive payments periodically on an agreed time period rather than receiving a lump sum payment. This is majorly implemented to reduce legal and other miscellaneous expenses.

The parties

Coming to the legal structure of this kind of settlement, the injured party who is also called as the claimant settles a tort suit with the insurance carrier or financial institution pursuant to a settlement agreement. The insurance carrier is called the defendant. The settlement agreement states that the defendant would be making periodic payments over time to the claimant in exchange for the claimant’s securing the dismissal of the lawsuit. In order to fulfill this long term obligation, the insurance carrier or defendant generally purchases annuity from a life insurance company or assigns this obligation of payment to a third party. The third party in such cases is known as an assignment company. The third party again receives some amount from the insurer or defendant in order to buy an annuity so that it can fulfill the long term payment obligation.

When does it come into the picture?

Structured settlements are very common today in personal injuries, vehicle accident settlements, insurance settlements and many more. The structured settlements sales process generally takes about forty five to ninety days depending on the client’s circumstances. However, you do not have to worry even if you are in urgent need of cash but are still waiting for your settlement. Insurers have an answer for this too. The insurers would help you get money and also pay any pre-settlement costs once they study your case.

Things to take care of

It is always recommended that the claimant avoid approaching middlemen and rather should approach a direct funder who manages a large investment portfolio. This would ensure that the claimant would receive the money quickly. In order to go for a structured settlement, the claimant should furnish certain documents like two forms of identification, photo ID like driver’s license or passport, filled application and a copy of settlement and release agreement.


Structured settlements are advantageous to the parties as they may tailor annuities to cover a plaintiff’s specific needs and all sorts of future demands or contingencies. Structured settlements also provide tax benefits to the plaintiffs. Such settlement bridges the gap between the parties who are far apart in their settlement negotiations and helps in reaching to an agreement that is acceptable to both the parties.

Taking a structured settlement loan

You can take a structured settlement loan to ensure that you can pay off the money. Structured settlement loans come with their own terms and conditions and are designed specifically to pay off your structured settlements. You will need to get an approval of a judge when asking for a structured settlement loan but that’s all there’s to it.

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