What are the benefits of Structured Settlements?
There are some important benefits to the claimant in structuring the settlement:
- The claimant receives compensation when it is needed. Instead of receiving a lump sum that has to be invested at risk, and managed for a fee, the recovery is paid out over time. This better correlates the settlement with the actual need for funds.
- The full amount of the damage payments is tax-free. A lump sum received for physical injury also would be tax-free, but the investment earnings earned over the years or decades on that lump sum would be taxable. By structuring the settlement, the claimant avoids this taxation.
- The claimant receives payment from two of the safest types of funding assets available: life insurance annuities or U.S. Treasuries.
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