Structured Settlements Negotiated Financial Settlements

Structured settlements also known as periodic payments are financial or insurance arrangements which are negotiated, making the one who has claimed it agrees to resolve any personal injury by receiving a part or even all of the settlement through periodic payments and not a lump sum amount. As this settlement is negotiated, it can be offered or requested by the defendant or plaintiff respectively, making both of them agree on the same terms. It has become a part of the tort law of many countries now like England, Canada, the United States,and Australia, helping both the parties of the lawsuit to avoid trial.

Uses of structured settlements

In various countries this settlement is being used for different purposes, helping parties in the lawsuit to avoid the cost of legal proceedings.

  • It is used in personal injury and medical malpractices.
  • It is often used in product liability cases to make both the parties settle in their best interests.
  • It is used in pharmaceutical injury cases like litigation for birth defects because of the drug, Thalidomide like in Canada.
  • It is also used for income tax provisions.
  • It works well for the family of wrongful death victims too.sell my annuity payments

These periodic payments that are made under this settlement are mostly funded by a few annuities which are purchased for future payments. It involves the claimant, the one who has been hurt, coming to the defendant, who is the insurance carrier for a negotiated settlement where the claimant ensures dismissal of the lawsuit and the defendant ensures the periodic payments. If these payments are life-contingent then the claimant is named as measuring life under annuity or the purchasing company takes a life insurance policy to protect them financially in case of death in this settlement.

These structured settlements can be assigned or non-assigned. The assigned cases being the one where the defendant/company assigns the periodic payments to a third party by a qualified assignment according to the criteria in Internal Revenue Code Section 130 while the unassigned cases are the ones in which the defendant retains the payment obligations, funding it by a matching asset.

The benefits of this settlement

There are many advantages of this kind of settlement made between the defendant and the claimant, like:

  • These payments are tax-free
  • They do not stop with the death of the receiver.
  • The payment can start after as long as decided by both the parties and even be stretched for long in the same way.
  • These do not fluctuate with changes in the market.
  • These payments help to have a continuous income for a time period.

This settlement is an easier and wiser choice especially for a person who has been badly injured, needing time and money to recover along with yielding more than a lump-sum pay-out because of the interest of the annuity.