How Does a Structured Settlement Work and What Is It?

Do you have a right to file a lawsuit against a person or company you have a dispute with? If you have suffered a personal injury, the answer is yes. Suing for wrongdoing often leads to structured settlements.

How does a structured settlement work, and what is it exactly? Read on to find out.

What Is a Structured Settlement?

What are structured settlements? Structured settlements result from someone or a company paying money to another to right a wrong. This occurs during a civil lawsuit.

If the wrongdoers lose their case in court, they must pay a set amount of money to the victim. Some agree to a settlement on their own.

The payments from a structured settlement come through a stream of tax-free payments. It provides long-term security financially.

The wronged party might have the option to get a lump sum settlement if the amount of money is smaller. Larger amounts always result in an arranged structured settlement annuity.

How Does a Structured Settlement Work?

How does a structured settlement work exactly? The agreement process is as follows:

Suing the Defendant

The first step in the process is for the plaintiff, or wronged party, to sue the defendant to receive compensation. The grounds for suing include illness, injury, or death.

To keep the lawsuit from going to trial, a company or individual may agree to a structured settlement independently.

The Terms

To determine the terms of an agreement, the defendant and the plaintiff will work with a qualified individual. This part of the process includes figuring out how much the regular payments should be, how long they will go on, etc.

The terms can include a clause that says the payments should increase during certain times. A defendant will pay for the qualified assignee and buy the annuity.

Annuity Purchase

Through structured settlement companies, an annuity gets purchased. The contract will match the needs of the settlement. After the terms are set in stone, edits aren’t possible. In some cases, a lump sum gets moved aside to cover fees like attorney charges.

The Payments

The insurance company the annuity was purchased through will pay the plaintiff payments according to the contract terms. To protect the value from inflation, the annuity earns interest over time.

A plaintiff gets paid on specific days, depending on the terms of the contract. The only way to get paid beforehand is to sell all or a portion of structured settlement payments. Learn more now about how you can get cash instantly for your settlements.

Do You Qualify for a Structured Settlement?

After understanding how a structured settlement works, you should know if you qualify for one. If you have been wronged by an individual or company in any way, suing them to receive compensation is required. These periodic payments are designed to help those suffering become more financially stable.

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