Your Questions About Structured Settlements Answered

What is a structured settlement?
When you have an insurance or other payment due to you, a structured settlement is a future stream of payments guaranteed to be paid to you over a specific period of time.

In the USA, it is typically a tax-free payment. What this means is instead of taking all the cash payment of your insurance settlement at once time, you have another option, which can save you a lot of money over the settlement period.

You can take less money now, and receive a future stream of payments by reputable insurance company.

Splitting your awarded settlement amount between an up front payment and a future stream of payments is called a structured settlement.

The most important thing to do when you are looking for the best structured settlements is to visit and check out at least 3 different sites. Then you can easily compare their various payout rates, fees and services.

Just doing this simple comparison of at least 3 different structured settlement sites can save you thousands of dollars. Don’t be lazy. Take the time and you can make a huge saving!

Can anyone receive a Structured Settlement?
No. Only people who are receiving money due to a physical injury are able to receive a structured settlement. It is important to note, you must also purchase the structure at the time of settlement to be eligible for the tax benefits. After the settlement agreement is signed it is too late.

How much tax can I save by taking a structured settlement?
Typically you will be able to save anywhere between 25% and 35% in state and federal taxes. Every situation is different and has to be investigated to figure out the precise savings. Generally, if your payment was to be a million dollars paid slowly to you over a period of years, you would be able to keep the $250,000 to $350,000 that, in other circumstances be paid for state and federal taxes to the government. For more information see the links on the right hand side of this page.

Are there any reasons not to take a structured settlement?
A few things to consider before you take a structured settlement are that to receive the tax break, Congress has said that all your settlement payments in the future must be "fixed and determined" at the time the structured settlement is set up. Your payment stream cannot be altered after the initial settlement. The issue here is that while you gain tax advantages, you lose some flexibility in the process as payment dates and amounts cannot be changed. However, for most people, the tax advantages outweigh the flexibility issues. Make sure to get more advice on this regarding your specific situation.

What is the most common type of payment streams in Structured Settlements?
Generally, people choose a life annuity with a guarantee period. So, an example would be, you receive $2,000 per month for life with a 20 year minimum guarantee period. That means you will receive all payments over a minimum of 20 years and then for the life of the person thereafter.

Will I receive a check from my insurance company each month?
While you can opt for checks with some insurance companies, most will suggest you sign up for electronic transfer directly into your account. Once you have done this, you needn’t worry about checks from then on, the amounts will just be deposited directly in your account.

Any other benefits of structured settlements?
Another reason that structured settlements can be a good option is that often insurance companies will discount the price based on your injury only for structured settlements. Let's look at an example. If you were a 30 year old woman has about a 50 year old life expectancy (meaning you should live until 80). But if you were injured, the insurance company might decide you have a 30 year life expectancy and decrease the price accordingly.