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Structured Settlement-What Or Why It Is And How It Works

The first question in your mind can be what is the structured settlement? Is it a legal term? What are the conditions to apply for it?
To clarify your quest here is the detailing of it. At the end of this article, you will get answers to all your questions.

a) What’s A Structured Settlement?

It is the financial term defines the settlement between the injured and the defender. This fulfills the money requirements of injured person or death person’s family. It can be requested by injured or provided by the plaintiff itself.  It is the agreement between both the parties; they must follow the terms and conditions of this agreement. Structured payments can be in large lump-sum cash form or periodic form. The structured payments of it are known as an annuity.

In the process, defendant transfers obligation to a qualified assignee. Assignee buys annuities from the Life Insurance Corporation. The Corporation makes future payments and defendant releases from liability.

b) Why Structured Settlement

  • You will get pay out for your bills and expenses.
  • You can arrange the payment according to your requirements.
  • Structured settlement is designed to pay for your lose.
  • After the death of your dear one your family will get periodic income from it.
  • Your payment will be on fixed date.
  • It not only fills the current as well as future requirements of injured person.
  • You can sell your payments and fulfill your financial needs.
  • Defenders get tax exemption on the payments.

c) Types Of Structured Settlement

Large Initial Payments:

Get your portion of settlement money early if you require it for your expenses immediately. Later you will get regular paycments.

Delaying Payment for Future Security:

You can choose to delay the payments after the retirement or for an old age.

Money for Extra Expenses:

You can choose the settlement to pay you for extra expenses like tuition fee or other classes. If you’re a student or an unemployed person, the expenses can be more. Your Defendant is liable for your necessary extra expenses. Extra expenses don’t mean you become Spendthrift and start spending too much.

Increasing Or Decreasing Money Over Time:

A Structured Settlement gives you option to choose you want your money in ascending and descending form. It totally depends on you how you want to manage the settlement.

d) Structured Settlement Can Be Awarded In The Following Conditions:

A Structured Settlement Case of Personal Injury:

Injured can use the payments for medical expenses, tuition fees and extraordinary expenses. Injured persons mostly choose structured settlement than lump sum cash.

A Structured Settlement Case of Workers Compensation

When workers injured in any accidents company or owner offer them structured settlement to bear their expenses for a period of time or lifetime.

A Structured Settlement Case of Wrongful Death

After the death of deceived person, payments can be given to his or her family for the loss

e) Guaranteed and Non-Guaranteed Payments In Structured Settlement

Guaranteed Payments Non-guaranteed Payments
Also known as Inherited payments. Your heir will receive the payments whether you are alive or died.
Example: if your payments are up to the age of 75 and you died at 60 then remaining 15 years your heir will receive the payments.
Also known as non-inherited payments. You can’t choose heir in the case.
Example: if the payments are up to 75 years and you died at 60 then your agreement Is considered as completed.
Easy to sell and more valuable. Comparatively less valuable than guaranteed payments

f) Lump-Sum Payments vs. Periodic Payments

  • Lump-Sum is the money received by Plaintiff as a one-time payment and Periodic is what he gets for a period of time.
  • Lump-sum money as we get single entity is generally taxable. Recurring money is tax-free.
  • With cyclic payments, you can manage your lifetime plans.
  • Lump-Sum money is a good choice for defenders as he will be free after paying it to Injured and periodic payments require him to be associated with the person Life-long.
  • Delaying Periodic payment is proved to be a good choice after your retirement.

g) Examples Of The Structured Settlement Related Cases:

1.Thalidomide Affected Children Case: This was the first settlement between children with phocomelia (severe birth defects) and The Company.
2.A 15-year Old Child Hit By A Car: The child, Marty received $15,000 a year as educational funds and $4,000 a month till he reaches 25-year of age.
3.Died-Worker’s Case: Jonathon died during he was working in the factory and died, his wife received $3,000 a month for 30 years.

h) Best Structured Settlement Companies:

  • Annuity Transfers, Ltd.
  • Client first settlement funding
  • Fairfield company
  • Settlement Capital Corporation
  • Senecaone
  • Liberty Settlement Funding
  • Novation settlement Solutions
  • Campbell Financial Corp.

i) I Have A Structured Settlement and I Need Cash Now?

  • you can sell a certain number of payments
  • you can sell part of each payment you receive
  • you can sell all structured payments

Cash out structured settlement:

The increased craze of investing for structured settlement payments is probable. It yields high with low risks. Structured settlement rates recently are offering 4 to 7 % returns to sellers.  Structured settlement purchasing companies generally invest that money into income generating businesses and company gets returns.

Best Structured Settlement Purchasers

  • Fairfield Funding
  • Peachtree Financial Solutions
  • G. Wentworth Structured Settlements
  • Olive Branch Funding
  • SenecaOne
  • Annuity Transfers
  • Woodbridge Structured Funding
  • Stone Street Capital
  • Oasis Financial
  • org

j) Pros and Cons of Structured Settlement


  • Guaranteed payment for the span of time
  • Periodic Payments or lump-sum plus structured payments
  • A agreeable agreement between Defendant and Plaintiff
  • Injured gets advances in medical expenses
  • Structured settlement provides tax-free payments under U.S. Tax Code


  • Changes in economy like recession or inflation later in future makes payments small
  • All expenses are not paid by defendant
  • Some parts of Income is not Tax-free
  • There is a risk of structured settlement company being insolvent. After that, the plaintiff may lose all or some payments

Written by Bidyut Bikash Dhar

Bidyut Bikash Dhar is a proficient Digital Marketing & Online Branding Strategist, Mentor, and Inbound Marketing Specialist with a focus on Reputation Management, International Healthcare Marketing, and Medical Tourism. His expertise encompasses a wide array of areas, including Digital Marketing, Lead Generation, and Conversion Optimization. Bidyut excels in Search Engine Marketing, leveraging his skills to enhance online visibility and drive targeted traffic. With a passion for innovation and a dedication to excellence, he crafts strategic solutions to elevate brands and amplify their online presence. Bidyut's commitment to mentorship and his extensive experience in healthcare marketing make him a valuable asset to businesses seeking to expand their reach and impact in the digital landscape.

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