Whenever a personal injury claim is being settled and a significant payment will be made by an insurance company, our client will almost always be asked to consider taking all or a portion of the settlement funds through a structured settlement. For any portion of a settlement received in that manner, the insurance company that is paying damages to you uses that portion fo the money to purchase an annuity from a life insurance company. You will then receive periodic payments from a life insurance company for whatever period is agreed upon. The timing and the amount of the payments from the annuity can be selected by the injured client. For example, using rough numbers, one client may have $100,000.00 allocated to a structure settlement. The client might decide to receive monthly payments of $1,000.00 for ten years or 120 months. Another client using the same $100,000.00, may elect to receive payments beginning many years in the future, such as at retirement age. In that case, since the money allocated to the structured settlement can draw interest for a much longer period, the periodic payments, and the total eventually paid, will be larger.
Advantages of a structured settlement include the receipt of tax free interest which the original annuity payment earns, flexibility in selecting the amounts and dates that payments will be received, and protection of these payments from claims of any future creditors. The primary disadvantage of a structured settlement is that it cannot be modified once the annuity is purchased based upon the amounts and dates of periodic payments selected by our client. Also note that a structure settlement can only be accomplished by the agreement of the parties. A judge or jury cannot award the payment of damages at a trial through a structured settlement, but only in a lump sum.
At Koederitz Law Firm, we have worked with many clients who have been offered structured settlements, and we will be happy to assist you in making a decision as to whether a structured settlement is appropriate for you. Call us at (225) 295-9494 for a free consultation.