Learning More About Structured Settlements
August 8, 2012 by Answer Provider
So you have been in an accident and are working your way to settling your case. Your lawyer has informed you that you have won your case and will be awarded a settlement. The money you are awarded will be made in monthly structured payments over 30 years. But just exactly what is a structured settlement and structured settlement payments?
What is A Structured Settlement?
Structured settlements are payments that are made to an individual over a period of time in a structured set up. The payments are actually made through an annuity arrangement that can be paid over months or years to the victim of accidents. In more legal terms structured settlements are considered insurance or financial arrangements where a claimant decides to receive periodic payments for the injury or loss suffered.
The Process of Structure Settlements
Usually structured settlements will start with someone being harmed and injured. The person who was injured or suffered a loss decides to settle the lawsuit with the defendant in an agreement that to dismiss the lawsuit in exchange for money. The money of course is the settlement and it will be paid over a specified period of time.
The periodic payments and amounts are all set up and arranged with the lawyers to ensure that both the claimant and defendant reach a comfortable agreement. Once the payment are set and finalize they cannot be changed to the process tends to take a little more time.
Usually the payments and funds are actually handled by a life insurance company by using an annuity. Sometimes the payments are life contingent, which simply means that the structured settlement payments must be for as long as the claimant is alive.
Financing and Selling Payments for Lump Sums
With the way structured settlements are set up usually require the claimant to wait several years to receive the full payment. With this being the case you have a lot of people seeking a way to get future payments sooner. This is basically an advance on the future structured settlement payments.
Since the number of people looking to sell their payments increase that opened an opportunity for a new business. In came structured settlement companies such as Imperial Structured Settlements, JG Wentworth, and Peachtree Financial.
Companies like this will allow you to sell some or all of your future payments for lump sum cash. For example if you have a structured settlement that is set for 40 years worth of payments you can call Imperial and they will can you a cash lump sum for some or all of those payments. In many cases the cash that is received is used to pay for debt, further education, or to purchase a home.
Many think that the allowing of the monthly payments of an extended period of time is the best part of the structured settlement. This is because instead of someone getting $250,000 up front they will get small payments for the next 20-30 years. This almost ensures that the person will not blow their entire settlement by making a bad financial decision.