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What are the Benefits of a Structured Settlement?

by sambit
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structured settlement

Many people are unaware of the benefits of a settlement. The most common forms are lump sums or structured settlements. Structured settlements offer benefits with one main advantage being that structured settlements provide long-term financial security for those receiving them. If a claimant ever wants to sell their structured settlement they need to work with reputable structured settlement companies to help get the best terms from the sale.

Why use a structured settlement?

  • A structured settlement is beneficial when the claimant or court wants to ensure there is income provided throughout a certain period of time or until a certain age.
  • A structured settlement is often an agreement between the plaintiff and the defendant in which an insurance company pays through an annuity over time to the plaintiff. It allows for individuals, who are involved in lawsuits or accidents to receive compensation in smaller long-term payments.
  • Many people who can no longer work due to a disability or accident become dependent on others after being compensated for their losses. A structured settlement offers many benefits to an individual because it allows them to plan on how to use their future payments in a way that best suits them to properly arrange the support needed.
  • Structured settlements prevent people from spending all of their compensation at once, which could cause individuals to go into more debt that they may not be able to pay back. On the other side though a larger lump sum payment could allow the individual to invest this money in something that will grow it to ensure that they will have the settlement money available when they need it most.

Disadvantages of a structured settlement

Although there are many positive aspects of a structured settlement, such as the ability to plan for the future guaranteed income there are some downsides to receiving payments in this manner. One main disadvantage is that annuitants may need a larger sum of money than what is to be provided in their next payment.

Another disadvantage of receiving payments in this manner is that they cannot invest a larger sum of money in an effort to grow it over time. They could invest in the market, a business, real estate or other financial vehicles that could lead to increasing the settlement money to a larger amount.

While there are many benefits of receiving a structured settlement, it is essential that you fully understand what this type of compensation entails before deciding how you will be paid.

When individuals receive money from an authority like the court, they are often worried about what will happen if they spend it all at once. Structured settlements provide financial security for those who need long-term payments for a lawsuit.

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