The concept of structured settlements is fast gaining popularity and is proving a better alternate to lump sum payments made for personal injury claims. A structured settlement is a contract between the insurance company and an injured consumer. As part of the contract, it becomes obligatory for an insurance company to pay a periodic installment to an injured party or to the surviving family members, as the case may be. While a lump sum payment is a feasible option for any minor injury, periodic payments can be of advantage to those inflicted with injuries requiring treatment spread over a period of time. In times of hardships, a steady stream of income can provide the much desired relief and peace of mind. A major benefit associated with structured settlements is that they are tax free both at the state and the federal level. Compare this to lump sum settlements and you will find that whereas the principal is tax free the income generated from the same is not. Furthermore, since structured settlements entail a small amount of cash at a time, you are spared the worry of planning their investment. Again, structural settlements can prove to be a great source of security especially to senior citizens and children. For senior citizens they provide the comfort to spend their retirement years in peace without worrying about financial issues. Moreover, a lump sum amount in their account can make them victims of unscrupulous elements of society. In case of children, the payments can be utilized to pay for their educational costs. Another interesting aspect of these structured settlements is that they are also beneficial to the defendants in that they do not have to approach the court of law for settlements. If this happens, there may be chances that the amount decided by the court could work out to be less than the amount offered through structured settlements. Also, for out of court settlements, the fees of the attorneys can be considerably reduced. |
