Structured settlements

Structured settlements are payments made to a consumer harmed by the insurance company where the person bought his policy. As suggested by the name itself, structured settlements are the payments over a period of time rather than be paid in a lump sum. Given their nature, they are also called periodic payments.

Indeed, the settlement laws allow defendants who, in most cases, constitute insurance, pay the full amount due in installments over a period of time. This simply means that the consumer does not receive the full amount as a means of payment.

The question is who benefits from this arrangement - the insurance company or the aggrieved consumer. Structured settlements are an ideal solution for both parties - insurance companies and also the injured consumer. This is because structured settlements are contracts between insurance companies whereby insurance companies promise to make contractual payments to the policyholder in the event of injury. In case the consumer dies in an accident, the surviving members of the family may request that amount. The advantage for insurance companies is that they do not have to pay the full amount at one time. In addition, the Act allows these companies to keep the full amount in case of death of the consumer. For consumers, this means that it is forbidden to receive a lump sum payment. This may, in some cases, increase the difficulties whether to respond to major medical expenses following an accident or other catastrophe.

These structured settlements enjoy special provisions in law that the income derived from these periodic payments are tax free. This means that it becomes increasingly difficult for most investors in the rate of return generated from a structural solution. Consequently, the consumer not only gets great performance but also security and peace of mind in the bargain. This is because a structured settlement means a long-term income that too with the added advantage of being tax exempt under the Act.