Settlement payments are distributed to the claimant not from the responsible party directly, but from a structured settlement annuity. With these settlement annuities, you hire a life insurance company to provide an income stream or a set of lump sum payments.
What types of legal cases can use structured settlements?
Structured settlements are often used for physical injury cases, including workers' compensation cases and medical malpractice cases in which personal injury occurs. Physical injury settlements allow funds to enter a tax-exempt structured settlement annuity.
Such cases involve claimants who have suffered serious injuries, as well as those who are temporarily or permanently disabled. Structured settlements are also used in wrongful death cases as a means of providing income for surviving family members.
Benefits of a structured settlement annuity
Structured settlements have become increasingly popular in large part due to the substantial benefits they provide to the claimant and also to the defendant / liable party. As mentioned above, physical injury settlement funds are not subject to state or federal taxes. The fact that the settlements are secured by the annuities of life insurance companies and US Treasuries offers invaluable peace of mind for claimants.
Additionally, payments can be carefully tailored to meet future needs. Claimant's expenses and needs, whether medical or otherwise. These payments can also work in conjunction with public benefits, as well as trusts and other useful financial programs.
Structured settlements are quite advantageous for plaintiffs, they also provide excellent benefits for defendants. Accepting a structured settlement can help reduce legal overhead and is very helpful in breaking up any point in the negotiations. These arrangements also allow defendants to avoid the risks involved if the cases were to be tried.
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