What is a Structured Settlement?

What is a Structured Settlement?

Structured settlement or a lump sum?

The payment depends on the details of the case and what compensation needs that your injury requires. 

A lawyer not only helps you get a settlement for a personal injury case, but they also help you get the right kind of settlement. With the settlement established, you will know that your case is over and you can begin to pay what bills remain from the cause of the injury. 

Structured Settlement vs Lump Sum

When beginning work on a personal injury claim, knowing the difference between a lump sum and a structured settlement. The biggest difference between the two different settlements is that a lump sum settlement is a complete payment paid upfront at once. A structured settlement is a series of payments paid over a set of time. 

The kind of settlement that your compensation will have will depend on several factors. Structured settlements are often used when the compensation involves a lot of money to be paid out. A structured settlement can provide more financial security in the long run to manage the long-term loss of income from an accident. 

Structured settlements became more popular after the passing of the Structured Settlement Protection Act from the ’80s. Since people know that their payments will be protected after the settlement has been reached, they want to take advantage of their options and feel secure in their financial futures. 

While not as popular, lump sum payments are still used. Lump sum settlement workers’ compensation is still used to provide worker’s compensation when necessary, especially when working with lots of workers. The lump sum settlement is not taxable in cases of worker’s compensation and injury making it a great payment option for people receiving worker’s compensation. 

Structured Settlement vs Annuity

Structured settlements and annuities are very similar. Annuities are annual payments paid through an insurance company and investment firms. Structured settlements can be offered through annuities but so can other large payments, like lottery winnings. 

Annuities provide structured settlement investments to help build up payments and offer more money. Annuities are not as flexible as structured settlements and can offer more limited payment options for people receiving them. These little differences between the two options can create a world of differences when determining what payment option is best for you. 

How Structured Settlements Work

Since the boom in popularity among the structured settlement industry, more people want to know how it works. The amount is calculated by insurance companies and can be potentially negotiated with by lawyers. The structured settlement payout is determined by the type of accident and injury, the financial loss, and liability from the company. 

When receiving a structured settlement, you will want to know how structured settlements are paid out. The payment will be applied to the individual who is receiving the payment. The payments will be paid out in regular installments depending on the agreement of the settlement, often yearly or monthly. You can also withdraw money if the settlement plan allows for it. 

Knowing how settlements are paid out will help you make the best choice for your case. Working with a lawyer or settlement broker will ensure that you have the knowledge you need to make the right choice for your situation. 

Who Negotiates a Structured Settlement?

Lawyers and structured settlement brokers can negotiate a structured settlement. Laws have been put into place to protect lawyers and brokers from taking advantage of people needing settlements. Working with a lawyer or broker will keep you protected no matter what happens. 

A structured settlement broker salary comes from the settlement that they work out for their clients. This is one of the reasons for the laws protecting people who receive structured settlements. Not only do the laws ensure the payments are protected, the laws provide options for people who are not aware of them. 

How do Insurance Companies Determine Settlement Amounts? 

Lawyers and brokers work with insurance companies to determine what the settlement deal is. A structured settlement annuity calculator will help you establish a baseline of what you can expect from a settlement. 

A structured settlement broker and the insurance company may use a different settlement payment calculator to establish the payouts. Several factors will be considered when calculating a settlement of any kind and structured settlement will need to be factored to payout for a period that can include years. A broker will want to ensure that you will be covered for as long as possible. 

Kinds of Structured Settlements

There are five main types of structured settlements. Since structured settlements are designed to provide you with money when you need it, you can find the option that works best for your case and financial situation. 

Delayed payments mean that you can hold off on receiving payments until retirement. Payments can also be increased or decreased over time, depending on how much money you calculate you’ll need as time moves on. If a settlement has a yearly income, you can request additional money when needed. A settlement can also come with a large payment upfront when first negotiated. 

These structured settlement examples show that there are many ways to receive a structured settlement. All forms of these payments come with structured settlement protection to ensure that your payments are available when you need them. 

Structured Settlement Companies

Several companies work with structured settlements to bring you the best options. The best structured settlement companies will work with you to establish the best course of action for your case. When you’re asking for structured settlement companies near me, you can find one that will work for your needs. 

Structured settlement companies can do more than negotiating a settlement on your behalf. Some companies will assist with a structured settlement by offering a structured settlement buyout. You can sell a structured settlement to get cash immediately if the current payment structure is no longer working for you. 

When selling a settlement, you want to establish the structured settlement buyout percentage. Once that has been decided, a company can buy the structured settlement for cash now for you. Some people may find that they need cash immediately and a structured settlement may not offer that option. Working with companies that buy annuities can provide that option. 

Structured Settlement for Minors

Minors have different legal considerations than adults. Structured settlement annuities for minors are not much different than ones for adults, except that minors have no say in how their settlement is determined until they turn 18. Before turning 18 a judge determines how the payouts will work and how the money can be spent. 

After the plaintiff turns 18, they control how their money is spent and can control their settlement. There may still be limitations but these limitations will likely be set by the brokers or lawyers and not a judge. 

Structured Settlements and Disabilities

In some structured settlement cases, the plaintiff is receiving money because of a disability. In the case of any kind of disability, the broker and insurance company will determine the payout based on the kind of disability and how it impacts the plaintiff. 

A permanent partial disability settlement calculator can be used to determine what kind of settlement and payout the plaintiff can expect to receive. Permanent disability settlement amounts are factored into the system for structured settlement providers. Many considerations are taken into account when factoring structured settlements, especially when a disability is involved.

How Does a Car Accident Settlement Work?

Car accident settlement payouts are similar to other kinds of structured payment options. The insurance companies and brokers will determine what kind of payment you will receive and you can decide how you want the payments to be handled. 

Structured settlements with car accidents can happen with any kind of car accident that leaves a large enough impact on the plaintiff. A settlement payment calculator will be used to determine how much money will be offered in the structured settlement.

Benefits of Structured Settlements

Since the passing of protection laws at the federal and state levels, there are many reasons to get a structured settlement when dealing with personal injury cases. A major benefit is the structured settlement annuity taxation policy, in many cases, structured payments and annuities are not taxed. 

People will also want to know if structured settlements earn interest. Again, in many cases, structured settlements do earn interest that plaintiffs can use. These protections will help you take full advantage of your structured settlement. 

Drawbacks to Structured Settlements

One of the biggest downsides to using a structured settlement is that once the settlement has been negotiated, you cannot go back and negotiate. All settlements are final and the structured settlement cannot be redrawn. 

This is one of the reasons there are so many protections for plaintiffs. When working with structured settlement annuity companies, they will go over the pros and cons of the plan to help you decide if that is the best choice for you. A personal injury settlement calculator may not calculate for everything and a broker can help you determine that.

Structured Settlement FAQs

How Much to Ask for in a Personal Injury Settlement? 

The amount to ask for in a personal injury settlement will depend on several factors. Every case is different but personal injury settlement amount examples can range from tens of thousands of dollars to hundreds of thousands, depending on the accident and injury. 

Working with a lawyer or broker will be the best way to get the right amount for your case. They will use their experience and legal knowledge of past settlements to calculate how much you can expect from a settlement. Going through the legal system with professional help will give you the strongest chance of getting the settlement you’re eligible for. 

What to Look for in a Broker?

When looking at structured settlement companies, there are some things you will want to look at. To start, you will want to find a certified structured settlement consultant. Certified consultants have to follow regulations about structured settlements or risk losing their license. 

Once you have found a certified consultant, you will want to find one that listens to you and your needs. A broker helps you through the process of getting a settlement and you want to ensure that you are prepared for every step that may happen and feel good about the outcome. 

What is a Non-Qualified Structured Settlement?

A non-qualified structured settlement is a structured settlement that is not tax-free. Only some structured settlements are tax-free, including those that deal with physical harm or illness, wrongful death, or worker’s compensation. If your settlement doesn’t fall under those categories you must pay taxes on it. 

Can I Negotiate Medical Bills After a Settlement?

Negotiating medical bills after a settlement is an option that many people are interested in. Injuries are a common reason to pursue a settlement and those injuries likely come with expensive medical bills. Once you receive a settlement you can typically work with doctors to pay a lump sum to cover your bills at a lower price. 


Answering the question,” what is a structured settlement” can both clarify and create more questions. When deciding what personal injury settlement is best for your case, even the option of structured settlements has multiple choices for you to choose from. The flexible payment choices make it a strong candidate for many plaintiffs. 

Working with a qualified lawyer or broker will help you get the best settlement for your situation. A structured settlement will help you stay financially secure for years and continue to get money with legal protections. Structured settlements can be the right choice for several people for many reasons, including tax reasons.

Personal injury and settlements is a complicated subject. Getting help from professionals will give you the best chance at getting the financial help you need for many years. Get a structured settlement quote and find out what you’re eligible for.