The Benefits of a Structured Settlement

Decades ago, an individual who sustained injury due to the negligence of another party had no choice but to take their financial compensation in one large payment. Most people would invest this lump sum and live off the profits. Sometimes, this was a really good thing. Other times, it could be a total disaster. These days, there is an alternative to the lump sum payment, and it is called the structured settlement. A structured settlement involves an agreement that states the compensation amount will be paid to the injured party in installments rather than all at once. There are some clear benefits to receiving a structured settlement.

Someone who has been injured due to the fault of another has enough to worry about. The stress caused by a life-changing accident is substantial enough. The last thing an injured person needs is more stress caused by worrying about whether or not they've invested their money in the right way. Even a perfectly healthy person would be overwhelmed with the details of investing a large amount of money. Imagine someone who lost the use of their legs and is confined to a wheelchair. Adjusting to a new way of living is difficult, and the added stress of worrying about financial investments can make it even harder.

With a structured settlement, you don't need to worry about investing a large sum of money. You don't need to deal with the hassles of hiring a professional to invest the money or deal with tax issues. This can take a lot of stress off of an injured person. After all, who really knows for sure if the professional they've hired can be trusted or even knows what they're doing? In today's world, there are simply no guarantees.

A structured settlement is set up after an agreement is reached between parties, after which time an annuity is purchased. Many times, the annuity is purchased via an insurance organization. With a structured settlement, the individual receiving the compensation can count on a regular payment coming to them on an agreed-upon basis. Payments can last for years or even for the course of one's life. Another benefit to the structured settlement is that it adjusts to meet the rising costs of inflation. This means you end up with a higher sum of money than you would if you were to take your compensation in one large payment. This is a good thing for the annuity purchaser as well. They end up owing a smaller amount than what the sum of the payments are because they purchased the annuity up front.

All in all, a structured settlement is beneficial to all involved. The buyer doesn't need to worry about dealing with the hassles of making regular payments because after purchasing the annuity this is done for them. The person receiving the settlement wins, too. They don't have to worry with investing large sums of money. They get the peace of mind that comes with knowing they have a steady stream of income. While a structured settlement may not be the best thing for everyone, it certainly can be a good thing for many.

Copyright 2007 Jim Sterling - All Rights Reserved

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