Many people who settle a personal injury claim often opt for structured settlements. This means that instead of receiving the payment as a lump sum, the payments are structured so that the person receives them at regular intervals for a specific period of time, such as once a month for ten years. The length of time depends on the amount of the settlement and the amount of each payment.
Most claimants are not aware of the benefits available to them when they agree to a structured settlement. While receiving the payment as a lump sum, you do have a large amount of money with which you can pay off your bills, take a vacation or buy anything your heart desires. However, one of the main advantages of a structured settlement is that you have a reliable income to depend on for the term of the settlement, which in most cases is for life. At the same time, you do receive a lump sum payment at the beginning and while it is significantly lower, you do have the money to take care of your immediate financial needs.
There is also an advantage in the lessened impact on the amount of money by the amount of taxes that you have to pay. Whatever payment you receive is deemed as taxable income. By choosing to receive the full amount at one time, you are liable for a far higher amount of taxes than if you chose regular payments. The periodic payments out your income into a lower tax bracket and the payments are not taxed.
When you know that you will have a payment coming at the same time each month, you can prepare a monthly budget for your expenses. Thus, you don’t have to worry about how you are going to make your mortgage payments or the payments on other bills you may have.
You don’t have to worry about falling interest rates or fluctuations in the market. All structured settlements are underwritten by an insurance company, so that you know that the amount agreed upon is guaranteed and will not change.
As a rule, claimants of any personal injury, you should have the services of a lawyer that specializes in this type of legal arrangement. In that way you are not only sure of getting what you deserve and you are assured of receiving the settlement according to the terms you agree upon.