Understanding Structured Insurance Settlements

Simply put, a structured insurance settlement occurs when an insurance company releases the amount of money that was settled upon or ordered by the courts in a series of installments rather than in a single lump sum. There are many ways in which these payments can be made and some things about them that everyone should understand.

How Payments are Made

There are several ways in which structured insurance settlements can be paid out. First, the company may issue a series of lump-sum cash payments over the course of a year, two or even three. Cash settlements may also be provided but, more often than not, it is going to be a series of flat-rate payments that are made monthly, bi-monthly, semi-annually or annually. The way in which a particular person will receive his or her money depends upon the agreement between the individual and the insurance company or the order of the court.

What are the Advantages?

Although many people believe that receiving all of the money to which they are entitled up front is the best way to go about things, this is not always the case. There is a certain amount of financial security that comes from receiving structured insurance settlement payments on a regular basis. Not only does this financial security begin as soon as the first payment is received, but it also lasts well into the future whether an illness, injury or personal situation should arise.

What are the Disadvantages?

There are two real disadvantages associated with structured insurance settlements. First and foremost, if the party’s initial medical bills are quite extensive, then low payments over time may not be enough to prevent late fees, collection calls, and perhaps even refusal of treatment. The other disadvantage is that the cash value of the settlement amount will depreciate over time as the economy changes and everyday items – gasoline, housing costs, groceries, etc. – become more and more expensive.

Is a Structured Insurance Settlement a Good Idea?

Whether or not a structured insurance settlement is right for you depends upon several factors, and it is best that you discuss your situation with a legal representative prior to accepting any offer from any insurance company. These individuals can help you determine what your initial medical expenses will be and fight for at least one lump-sum payment at the beginning. Of course, there are some third party companies out there that will offer you a lump-sum payment if you are receiving structured payments or an annuity, but there are significant charges for this. It is best to determine what will work best for you in the beginning rather than waiting several years down the road to obtain a lump sum of cash.

Structured insurance settlements can bring peace of mind to anyone who is worried about bills after an accident or injury, but they certainly aren’t the best idea for everyone in every case. Be sure to consider your unique situation carefully before making a final decision.