structured settlement payments in details

Nerd, Solutions 

A Structured settlement is a financial or insurance agreement whereby the applicant agrees to resolve a personal injury tort claim by receiving some part of the settlement in the form of periodic payments, at a specific time, rather than as a lump sum.


A structured settlement is paid from a legal settlement through periodic payments in the form of a financial product known as an annuity. Cash from a personal injury or a medical malpractice case is dispensed over a longer period to cover the long-term needs.

When those needs change, the contract specifically cannot be changed. However, those who receive settlement payments may choose to sell future payments in exchange for a lump sum.

It is hard to live on a limited income. When someone says they're living off a structured settlement, it means they are living off of cash for an annuity. While this may seem like a bad thing, because many structured settlement annuity are awarded for personal injuries, it could mean something completely different to some people. There are several reasons why a person will receive a structured settlement annuity.

Why People Receive Structured Settlements

There are many reasons why someone might get structured settlement and get money for an annuity. They are:

Structured Settlement Laws and Regulations

The issuing and selling of structured settlement is regulated at the national, state and even local standard.

Congress passed the law of periodic settlement payment in 1982, which instructed the use of structured settlements in personal injury lawsuits. Legislation protected structured settlement payments from federal, state and local income taxes. The idea of the conference was to establish payments over time, people will be protected otherwise they'll spend a lump sum too fast and thereby jeopardize their financial future.

Federal Law, including additional regulations in 48 states, it also requires court approval for the transfer of structured settlement payments. The judge evaluates each case to ensure that they meet the standard of "best interest". The judge will make a series of question to ensure that they understand the consequences of selling their payments and ensure they are financially secured once the transfer is complete.

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