Should I Accept a Structured Settlement in My Personal Injury Case?

February 1, 2021

When a claimant sues for a personal injury, settlement negotiations may suggest a structured settlement for the payment of damages. The claimant has the option to accept such an arrangement or not. While it may seem obviously preferable to receive the settlement in a single lump-sum payment, a structured settlement may be more appropriate in some circumstances. Read on to learn more about structured settlements.

What is a Personal Injury Settlement?

In a personal injury case, a resolution for damages will entail a certain monetary payment to be made to the claimant to rectify the claim. Usually, this disbursement is meant to repay the costs of medical or other losses incurred by the injured party. When the court is involved, a judgement may be awarded as the judge sees fit. In lieu of a judgement from the courts, the two parties may come to an agreement for a settlement through negotiations that often involves their legal representatives.

What is a Structured Settlement?

A structured settlement is sometimes suggested when a fair settlement cannot be paid in a lump sum. A structured settlement allows payments to be made to the claimant according to an agreed-upon and legally enforceable schedule. The payments may be made monthly, annually, or on some other periodic timetable.

Structured settlements are common in claims handled by insurance companies. Often, the settlement allows for the insurance company to pay a significant initial payment. After, insurance companies become involved to take over the claim, making subsequent payments on a recurring basis until the full claim amount is paid in full.

What is the Purpose of a Structured Settlement?

There may be benefits for accepting a structured settlement, such as tax advantages. In most cases, a structured settlement is requested by the respondent who claims that they cannot make a single lump-sum payment to settle the total claim. In many cases involving insurance companies, the initial insurance company has a policy with the secondary insurance provider precisely to cover itself against large settlements.

What are the Benefits of a Structured Settlement?

Structured settlements allow claimants some discretion about how they receive future payments. The amount of each payment can be negotiated. Often, claimants can choose to receive payments on an annual, quarterly, or monthly basis. The claimant may also choose the term, meaning they can spread the payments out over many years, for example. The terms may also allow for the payments to continue being made to the claimant’s heirs after their death. This steady stream of income allows the claimant to collect payments periodically without the tax liability of a large sum.

Are There Disadvantages of a Structured Settlement?

One major concern involves the viability of the insurance company that will be held to making the future payments. The insurance company must be reputable and stable since the likelihood of the institution’s future collapse may entail true risk for the claimant in receiving their full claim. A knowledgeable lawyer will help their client decide what form of settlement they should accept. 

Delaware County Personal Injury Lawyers at Eckell Sparks Help Clients Understand Settlement Options

If your personal injury claim is large, it is possible that your damages may have to be paid out according to a structured settlement. This arrangement may be the best way to ensure you receive a fair settlement, but it should be handled by a lawyer. A Delaware County personal injury lawyer at Eckell, Sparks, Levy, Auerbach, Monte, Sloane, Matthews & Auslander, P.C. can help you with your settlement.Call us at 610-565-3701 or contact us online for a free consultation. Located in Media and West Chester, Pennsylvania, we serve clients throughout Delaware County, Chester County, and Montgomery County.