Richard Suder, CFA, CFP®, ChFC, CLU, CRPS, AAMS

President
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Structured Settlements

Historically, damages paid out during settlement of personal physical injury cases were distributed in the form of a lump-sum cash payment to the plaintiff. This windfall was intended to provide for a lifetime of medical and income needs. The claimant or his/her family was then forced into the position of becoming the manager of a large sum of money. In an effort to create a more financially stable arrangement for the claimant, the Structured Settlement was developed.
 

A Structured Settlement is an alternative to a lump sum cash payment in the resolution of personal physical injury, wrongful death, or workers’ compensation cases. The structured settlement usually consists of two components: an up-front cash payment to provide for immediate needs and a series of future periodic payments which are funded by the defendant’s purchase of an annuity policy or United States Treasury Securities. Those payors make payments directly to the claimant. In the unfortunate event of the claimant’s death, a guaranteed portion of the structured settlement may be directed to a beneficiary or his/her estate.

 

A Structure Settlement is a guaranteed source of funds paid to the claimant or his/her family on a TAX-FREE basis.

 

Benefits of a Structured Settlement

 

For Claimants:

 

  1. Future payments involving compensatory damages for physical injuries are free of federal income taxes
  2. Guaranteed payments provide for present and future needs
  3. Management-free investments
  4. Payments are secure and cannot be dissipated
  5. Competitive rates of return
  6. Payments are funded with an annuity from a secure life insurer or government obligation

 

For Insurers/Defendants:

 

  1. Provides a socially responsible settlement
  2. Provides the means for meeting a claimant’s financial needs on a long-term basis
  3. Achieves more timely settlements
  4. Reduces in-house handling
  5. Reduces legal and allocated expenses
  6. Provides a viable settlement tool for deadlocked negotiations
  7. Avoids risk of trial
  8. Qualified assignments eliminate any potential contingent liability

    9.  

 

   
Money couldn't buy friends, but you got a better class of enemy.

 

 - Spike Milligan