Structured Insurance Settlements

When you get insured from a car accident as result of someone else, you will often receive compensation for your injury.  There are two ways that compensation is usually awarded, either a lump sum or a structured insurance settlement.  A lump sum settlement is when you get the compensation all at once in a lump sum.  Structured insurance settlements are when the insurance companies give you an annual or semi-annual payment for your compensation.  Both of these payouts have their pros and their cons.

A structured settlement involves receiving your benefit over a staggered period of time.  This means that you would get payments over the designated period of time.  This method works well if the person has medical expenses that he will have to endure for the rest of his life; taking away the ability of spending all of his funds if it were a lump settlement.  Lump sum settlements are when you are given all of the money at once for a one time payout.  This is a very good method if you require the money immediately or if you can invest it wisely. 

Not everyone is entitled to receive a structured settlement.  Structured settlements are only for people who have received a personal injury during an accident. 

Most cases are awarded in lump sum payouts because it gives the victim immediate access to the money.

It is important to know that if you do receive a structured insurance settlement you can sell it for a lump sum payment.  If for some unforeseeable reason you need cash later in the future and have a structured settlement, you can sell it.  Selling structured settlements will cost you a percentage of the settlement plus processing and transaction fees.  So even if you do take a structured settlement, you still have the option of liquidating it for cash.

Another benefit of structured settlements is the tax savings.  Because you are not receiving your money in a lump sum payment, a structured settlement is good for saving money in taxes.  You can often save between 25% and 35% depending on where you are and the nature of your settlement.  In order to receive a tax break, you are required to fix and determine the structured settlement claim at the time of the settlement and not at a later date.

So when you get compensated for a car accident, you can either be rewarded a lump sum or a structured insurance settlement.  Depending on your financial position at the time and your financial knowledge, you may prefer to have a lump sum or structured settlement.  There are pros and cons for each so you should do the research and find out which one is best for you.