Benefits of Structured Settlement

2007-03-08 10:33:40

( Financial )



Injury victims receive cash settlements to compensate for their losses. The payments may either be in the form of single lump sum or structured settlements. The payouts made through installments, usually via the acquisition of annuities, are called structured settlement payments. Many opt for structured settlements to safeguard the victim from financial loss and hardship, while making the recompense easier for the defendant.

Tax avoidance

One main advantage of structured settlement payments is that you receive a steady flow of cash that is virtually free of tax liability, both at the State and Federal levels. In contrast, earnings from interests gained from lump sum cash settlements are subject to Federal and State taxes.

More Secure

Conmen and unscrupulous individuals often prey on those with large amount of money, particularly adult children or seniors. If you get lump sum cash settlements, chances are you will be the target of such people. The likelihood of losing the entire sum you received is quite high. Structured settlements are more secure because you only receive small amount of cash. If you become a victim of swindlers or conmen, you will only lose a fraction of your settlement and are assured that money will arrive the following month.

Worry Free

Another benefit of structured settlements is that you don’t have to worry about how you are going to stretch the money you have to cover for future expenses. Since structured settlement payments are regular and usually span a long period of time, chances of unnecessary splurging are minimal.

Cheaper Settlement

Structured settlements are also cheaper because defendants who are aware that they could have liability often offer such settlements. Thus, the risk of spending more time and money in courts is minimized. Outside of court settlements usually reduce costs for both victims and defendants partly because they no longer have to pay for exorbitant attorney fees.


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