You are currently viewing Structured Settlement Annuity Explained

Structured Settlement Annuity Explained

Structured settlements are ideal options for multiple different cases, including personal injury lawsuits or mass torts. They help to speed up the conclusion of a lawsuit while offering lasting income and bulti-in budgeting with minimal taxation. Many personal injury plaintiffs are willing to take their winnings as a structured settlement, which is essentially a series of payments over time.  

What Is a Structured Settlement Annuity?

A structured settlement, or a structured settlement annuity, is a negotiated stream of payments over a specific period of time, paid to compensate damages for the release of liability in order to customize the needs of a plaintiff. This differs from a traditional legal settlement, which can be paid as a one-time lump sum; whereas a structured settlement annuity is made differently.

Structured settlement annuities are specifically designed to meet the needs of an injured party while paying money overtime to right a wrong. This can help the injured person to ensure regular compensation over time to provide long-term financial security to the injured party. The series of payments are detailed and are spread over time to offer better financial security over time since a single payout can be spent rather quickly. 

If the amount of money owed to the plaintiff is small, the wronged party may be able to receive one lump sum settlement but if the amount owed is larger, a structured settlement annuity may be an option. In such a case, the party that is at fault will put money toward a regular annuity that guarantees regular payments through an insurance company.

A structured settlement annuity benefits the receiver in more ways than offering a regular, steady income. A plaintiff who receives a settlement through a lump sum is at risk for spending it too quickly, reducing the likelihood of long-term financial security that could be offered by future payments. Additionally, any interest and dividends earned from a lump sum payment may be subject to taxes, while an annuity is considered income and interest and taxes earned through an annuity can eventually become tax-free. 

Structured settlement annuities offer several benefits, including:

  • Structured settlement payments are tax-free.
  • Payments can be scheduled for nearly any length of time and can begin immediately or can be deferred for as many years as the plaintiff requests. 
  • A beneficiary can receive tax-free payments in the event of the death of the recipient.
  • The reduction of making large, extravagant purchases while guaranteeing future income for the recipient. 
  • They do not fluctuate with market value, unlike stocks and bonds.
  • They often yield more than lump-sum payouts over time due to the interest an annuity may earn over a period of time.
  • There are no overhead expenses or fees.
  • Payments are guaranteed.

Who Is Eligible for a Structured Settlement Annuity?

There are several reasons a person may be eligible for a structured settlement annuity, including a person who has suffered personal injury and has filed a lawsuit seeking money from one who is believed to be responsible for the harm, one seeking workers’ compensation payments for medical treatment or other expenses during a period after a work-related injury during which he or she is unable to work or in some unfortunate cases during medical malpractice where a doctor or medical team issued for doing more harm than good, such as when the patient was injured or worse during a procedure. 

Benefits of Working With Quest Settlements for Your Structured Settlement

The experts at Quest Settlements can help you make your goals a reality. Find out how we can help you with your structured settlement payments today so you can get the money you need now.