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The lump sum covers the bills due right away and the structured payments cover any ongoing costs so that the settlement helps them budget everything correctly and still be made whole in the end, without worrying about accruing interest on the bills that are due now.

They keep you from spending all of your money too fast. Structured settlements are best for large settlements, where if you get a lump sum you might be tempted to spend a whole lot of money, really fast.

Structured Settlement Pros and Cons Structured settlements provide a continuous stream of tax-free income. ... Structured settlement payments may impact eligibility for means-tested benefits. ... Structured settlements are flexible. ... Structured settlements can last for life.

1. An agreement that ends a dispute and results in the voluntary dismissal of any related litigation. Regardless of the exact terms, parties often choose to keep their settlement agreements private. 2. In business law, the payment, satisfaction, and closing of an account.

There are no costs to create a structured settlement to the plaintiff attorney or injured party. The insurance broker's commission to arrange and purchase the structured settlement annuity is paid by the life insurance company.

Inflexibility is also an issue. Once the terms of a structured annuity payment are set, it can be very difficult to change the terms of payment. Also, the fixed payments may not factor in variables like inflation, while they will factor in increased age-risk ratios.

A structured settlement is a financial arrangement where a plaintiff or claimant receives a series of payments over time as part of a legal settlement or judgment. Structured settlements are often used in cases involving personal injury, medical malpractice, or wrongful death, and the payments are typically tax-free.

This compensation can be received in two primary ways: through a structured settlement, where you receive payments over a specified period, or as a lump sum, where you receive the entire amount at once. Lindsey Crossmier is a writer at StructuredSettlements.com with a specialization in financial education.

A settlement occurs when the plaintiff and defendant agree that the defendant pays a certain amount in return for the plaintiff dropping the lawsuit. Once a settlement has been reached, the two sides do not proceed to trial. Sometimes an insurance company will make the payment and not an individual defendant.

They keep you from spending all of your money too fast. Structured settlements are best for large settlements, where if you get a lump sum you might be tempted to spend a whole lot of money, really fast.