subject: Structured settlements [print this page] A structured settlement is an agreement, wherein the claimant agrees to receive annuity payments instead of a lump sum amount for the tort claim. A typical structured settlement works as follows: the claimant settles a tort claim with the defendant, or the defendant's insurance company. According to the arrangement between them, the claimant agrees for a series of payment in return for dismissing the claim in the court of law. This agreement results in the defendant, or the defendant's casualty insurance company coming under a long term financial obligation to pay the claimant.
The injured party, or the claimant, on the other hand receives an irrevocably directed stream of payments for the claims amount. One of the major constraints of a structured settlement is that the annuity and the irrevocable direction cannot be canceled at a later stage. Therefore, in case a person requires finances for inevitable expenditures, the only option left is to sell the structured settlement at a discounted price.
A Structured settlement can be structured as per the requirements of the claimant and can even be converted into a lifetime plan that offers guaranteed payments over the claimant's life time. Such an arrangement will ensure that you are able to sustain your finances through the funds you receive under the structured settlement. Another advantage of a structured settlement is that you will not have to pay any taxes on the annuity payments that you receive under structured settlements.
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