STRUCTURED SETTLEMENT AS AN OPTION TO LUMP SUM CASH

2007-03-08 10:33:40

( Financial )



Structured settlement is designed as an option to lump sum settlements. It is a periodic payment usually arranged by insurance companies or financial institutions to resolve claims on personal injury or legal claims on wrongful act against a person. Laws and regulations have been enacted in relation to structured settlement in both the national and state levels. It is incorporated in the Federal and Revenue Code as well as in the Medicare Law.

The Federal Income Taxation requires a structured settlement to be an arrangement of periodic payment for damages excluded from the gross income definition of the Federal Revenue Code. It also considers structured settlement as an arrangement for the periodic payment of workers compensation excluded in the Code. The arrangements of periodic payments must be paid by a person who is included in the contract that involves payment of compensation to the workers.

Structured settlement payments must be incorporated in the Medicare Act to protect the interest of claimants or beneficiaries. Payments of medical payments can be arranged in a structured settlement to ensure that the beneficiary has the necessary cash to use for medical expenses.

Payment of benefits for personal injury is structured into periodic payments to give beneficiary the regular cash flow they need for their daily expenses. Sometimes it might not be working out for the beneficiaries particularly when the amount of periodic payments is lesser than the amount of their actual expenses. Thus, lump sum payments are preferred by a number of individuals so that they can have enough money to cover all expenses.

Claimants or beneficiaries can arrange for structured settlement designed to provide higher amount of periodic payments at the start.It helps them meet higher expenses particularly those related to personal injury. Make sure, though, that you use wisely the payments of your structured settlement whichever design you choose.


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