Q: What is a structured settlement?

What are structured settlements, and how do they work?

A:  A structured settlement is a legal agreement where a claimant receives periodic payments, typically resulting from a personal injury, wrongful death, or worker's compensation claim. Instead of receiving a lump sum, the claimant accepts a series of payments over a defined period or lifetime, providing financial security and reducing the risk of mismanaging a large payout.

Structured settlements are usually funded by specially designed annuities purchased by the defendant or their insurance company. The annuity issuer makes payments to the claimant based on the agreed-upon schedule. The payment stream can include immediate or deferred payments, fixed or variable amounts, and may have provisions for cost-of-living adjustments, beneficiaries, or lump-sum payouts.

Learn more with our Comprehensive Guide to Structured Settlements (click here)