The Concept
Personal injury claims historically have been settled merely by exchanging a single lump sum of money in return for a release of any and all claims.
In contrast, a Structured Settlement is the payment of money to resolve a claim or lawsuit where, in addition to an immediate cash payment, at least part of the settlement calls for future payments. The payments may be scheduled for any length of time - even as long as the claimant's lifetime, and may consist of installment payments and/or future lump sums. Payments can be in fixed amounts or they can vary. The schedule is STRUCTURED to meet the financial needs of the injured individual. These needs may include income replacement, future medical expenses, educational funds and/or retirement planning.
Structured Settlements are funded using a qualified funding vehicle (typically a single premium annuity) guaranteed by contract and backed by some of the most stable financial institutions in the world - some that have been in business for over a century. Personal injury victims, commonly referred to as claimants, can receive future periodic payments free of taxes provided the claim qualifies under Section 104 of the Internal Revenue Code.
Structured Settlements are increasingly being used following recent headline reports of financial mismanagement among investment bankers, stockbrokers, and mutual funds. These reports reflect the uncovering of illegal trading practices, lack of full disclosure to the investor, unsuitable investments, and excessive fees that served to reduce the investor's return.
The Structured Settlement, by contrast, is generally funded by a fixed annuity contract with full disclosure and no fees! (i.e. what you see in the settlement agreement is what you get with the fixed annuity contract). It is arguably the most suitable investment for injury victims relying on their settlement recovery for income replacement and/or future medical expenses without the burden or expense of money management.
In summary, "Structured Settlements Provide Peace of Mind" for the injured party and their family on the road to recovery.