During negotiations for your personal injury case, you may hear the term “structured settlement” used by the counsel for the defendant(s). If you are like many people, you may not understand just what that means.
In simple terms, structured settlements are contracts between plaintiffs and the insurance company for defendants. Under the terms of these settlement contracts, the insurance company makes regular disbursements over an agreed-upon timeframe. Some structured settlements continue for the life of the plaintiff, while others may be for 20 years, for example.
Why they can be good options
Not everyone knows how to manage large sums of money. They can be naive about financial management and become targets for scammers or others looking to separate them from their money. In these cases, accepting a structured settlement is a good way to be sure that you will always have a source of income.
It benefits the insurance companies, too, because they don’t have to pony up large sums of money at once.
What are the negatives?
Your money is your money, and you may need it now. Especially if you are an older plaintiff, you might not be around for the next 20 years to collect your full settlement. If you want to buy a nice home or travel the globe while you still can, your best option may be to insist on a lump sum payment. You could wind up needing the cash to cover future medical expenses arising from your injuries in the original accident.
Also, insurance companies can go bankrupt, leaving plaintiffs in some circumstances with few options to collect what is due to them.
Learning all you can about your settlement options can help you make the best choice for your personal needs.