Choosing a Structured Settlement: Everything You Need to Know
No one comes into a personal injury claim knowing all about the different financial forms that your settlement can take.
Generally speaking, for personal injury plaintiffs who settle or win their cases, they have the option to either take their settlement in a one-time lump sum.
Or they can get their settlement in the form of a series of structured payments over time. This series of payments is known as a structured settlement.
If you’re unfamiliar with this form of an annuity, no worries. We’ve got you covered. Keep on reading to learn the basics of what makes a structured settlement and well as the process of forming one.
Structured Settlement 101: How Does It Work?
Starting with the very first step, and that would be the plaintiff suing the defendant to get their rightful compensation for either an illness, an injury, or a wrongful death.
If the defendant doesn’t want the case to go into trial, they tend to agree to give the compensation to the plaintiff in the form of a structured settlement. On the other hand, if the case does go to trial and the judge rules in favor of the plaintiff, then the defendant might be forced to set up a settlement anyway.
Working With a Qualified Assignee
Once you’ve reached this point, you’ll get a qualified assignee.
This is a professional who would help determine the actual terms of the structured settlement agreement. For instance, the duration of the payments, as well as the regular payment amount. Afterward, the defendant will be shelling money for the qualified assignee to buy an annuity for the plaintiff.
The qualified assignee will go ahead and purchase an annuity from a life insurance company. This way the annuity contract will match the original settlement needs. But, you need to keep in mind that the moment the terms of the annuity are set, they can’t be changed. It’s basically set in stone.
Moreover, there will be an immediate lump sum put aside to cover attorney fees or other types of trust funds.
The life insurance company will be paying the plaintiff their series of payments as time goes on. Or, it’s going to be a reputable structured settlement company. Yet, you’ll want to make sure that you’re working with a well-trusted company, so check this list of best structured settlement companies.
Typically, the annuity will earn enough interest to protect its original value from inflation.
Understanding Structured Settlements
When you’re in the midst of a personal injury case, and you’re probably dealing with either physical or mental pain (or both), we know that it can be overwhelming to try to understand the legal terms and your valid options.
Hopefully, our little guide on the basics of structured settlement helped clear things up. This will allow you to make well-educated decisions regarding your settlement.
Just remember to always involve your attorney in the discussions, and never talk with any insurance representative alone. You’ll want to do everything by the book, and we can promise you that it will be all worth it.