What Is A Structured Settlement?
A structured settlement, sometimes called a "structure", is an agreement in which an injured person agrees to accept a series of payments over time (as opposed to a single lump sum) from a defendant or insurer in return for a release of his or her claim. The name refers to the fact that payments are structured to meet specific needs.
The first payment is typically a check to cover attorney’s fees, liens, and expenses and to establish a cash reserve for the claimant. Future payments are backed by either U.S. Government bonds or annuity contracts from state-regulated life insurance companies*.
A typical structure might look like this:
$350,000 cash at settlement ––––––––––––––––––––––––––––––––––––––––––––––––––––––––
$2,000 per month guaranteed for life,
not less than 30 years certain ––––––––––––––––––––––––––––––––––––––––––––––––––––––––
$20,000 paid in year 5 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––
$40,000 paid in year 10 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––
$60,000 paid in year 15 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––
$100,000 paid in year 20 ––––––––––––––––––––––––––––––––––––––––––––––––––––––––
*
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