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A lump sum payment means that all of the money that you are awarded will be paid to you right away in full. On the other hand, a structured settlement is an annuity that is paid out to you over time. This means that you'll receive the compensation amount over a certain period of time, which is negotiable by you.

Structured settlements offer plaintiffs the financial security of payments over a fixed period. But lump sum payments may be better for cases involving minors. They allow for long-term investing. They may also be better suited for those who will need long-term medical expenses.

A recent offering of rising popularity is structured settlement annuity investing, often offering "no risk" rates of return in the 4% to 7% range.

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.

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.

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 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.