subject: Understanding Structured Settlements [print this page] In case you suffer injuries or damages caused by someone else intentionally or by negligence then you can file a lawsuit against that person for compensation. The party at fault can either settle this from his/her own pocket or through the liability coverage purchased from the insurance company. In personal injury tort claim or legal periodic payment responsibility, the defendant can offer structured settlement option to the claimant, who gets injured or suffers damages due to his/her fault.
A structured settlement is a financial or insurance agreement, which is beneficial for both claimant as well as the defendant. The claimant gets a periodic payment from the defendant and in return he/she agrees to drop the suit against the defendant. Moreover, this arrangement helps both in avoiding the tedious and expensive court procedure.
The claimant receives payments which are issued either on monthly, quarterly, half-yearly or yearly for a certain amount of time. These settlements are tax-free and are generally supported by annuity available through life insurance companies. The claimant has complete control over the amount received through structured settlement which he/she can use for his/her own benefit. For example, the claimant has the option of selling the settlement to an interested company in return of lump sum. This is known as the convert to cash, through which the money is immediately available which can used for various purposes. The claimant can earn profit by investing this lump sum and gaining interest income.
Hence, negotiating structured settlement will be advantageous for both, by satisfying needs of both the claimant and defendant.
