Can A Structured Settlement Give A Financial Security

Sometimes the settlement incudes an immediate cash payment

, if the needs of the recipients require this. The settlement payments are usually made through an insurance company.

1. The Long Term Security.

The settlement offer a financial security for a long time or even for the rest of the life of the recipient by paying regular payments, which the recipient knows in advance. The only possible risk comes from the fact, that the paying company can become bankrupt, which can happen.

2. How The Settlement Sum Is Calculated?

If the reason is the personal injury, a victim can claim a payment for an instant medical treatment and for the periodic payments for a long period of time. Usually the parties will agree about a settlement, which some insurance company will pay. The basis for the payment sum is the upcoming treatment, therapy and medical devices. The payments are totally tax free to the recipient.

3. What Are The Advantages?

Maybe the best benefit is, that the payments or incomes are tax free. If the living costs of the recipient will mainly be covered by the settlements, then he will be a tax free person. Another big benefit is, that the periodic payment system protects the recipient from him or herself. He just cannot waste more money in one month, than what he has.

4. What Are The Disadvantages?

The main disadvantage for some people is, that they cannot use more money now and they just have to wait for the future payments. If they would need a bigger sum of cash, it is not allowed to loan against the future payments. Some people, who see the settlement as investments think, that the profit is not that good.

5. The High Costs.

We saw, that the structured settlements can bring a nice financial security to the recipient. But they also have quite high costs. The recipients must make sure, that the costs and commissions will not eat too much from the capital.

In the case, that the financial situation of the recipient has changed and he will need more cash money, he can sell the structured settlement plan or take a structured settlement loan. With these he can turn the whole plan or part of it into cash money.

by: Juhani Tontti

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