A structured annuity settlement is a financial arrangement in which a plaintiff (the person who has won a lawsuit or settled a legal claim) receives periodic payments from an insurance company in exchange for giving up the right to receive a lump sum of money.
Structured settlements are typically used in personal injury cases, where the plaintiff may have suffered a serious injury and needs long-term financial support. Rather than receiving a large, one-time payment, the plaintiff can receive regular, tax-free payments over a period of time, which can be tailored to meet their specific financial needs.
The structure of the annuity settlement is agreed upon by the parties involved, and may include factors such as the length of the payment period, the frequency of payments, and any potential inflation adjustments. The annuity payments are usually funded by an insurance company, which assumes the responsibility of making the payments to the plaintiff over the agreed-upon period of time.
One potential benefit of a structured annuity settlement is that it can provide a more secure and predictable source of income for the plaintiff, as opposed to the uncertainty of investing a large lump sum of money. Additionally, structured settlements may have tax advantages over receiving a lump sum payment.
However, it's important for plaintiffs to carefully consider the terms of any structured settlement before agreeing to it, as they may be locked into a payment schedule that doesn't meet their future needs. It may also be possible to sell structured settlement payments in the future, although this can be a complex and expensive process.