3 Types of Structured Settlement Payouts - You Decide

A structured settlement is a large amount of money awarded to an individual with an explicit disbursement schedule. The funds are paid as an electronic funds transfer to the recipient bank account over a period of time. This provides a steady income stream over the term of the agreement and usually gives a better rate of return than if the individual received a lump sum of cash and re-invested that money elsewhere.

Structured settlements can be generated from lottery payouts, insurance awards or inherited annuities from a relative's estate. The bottom line is that a structured settlement is a monthly income stream that is intended to help the recipient pay for living and medical expenses if applicable throughout the term of the agreement.

Structured Settlements

When defining a structured settlement, it is important to provide future flexibility into the agreement so that you will not only receive a steady income stream, but allow for future life situations and challenges such as college tuition for the kids.

Building flexibility into your agreement should be something your financial settlement adviser should be able to help you with. Some of the options you might consider are:

Future Cash Payments - In addition to receiving steady income on a regular basis, you may want to include set amounts added as separate payments in the future. This will provide an individual the ability to receive exact amounts on specific intervals as part of the terms of the settlement. Graduated payments - As part of your agreement, there may be an option to have the settlement configured to have graduating payments on specific anniversaries of the award. These graduated payments would be pre-determined and agreed to as part of the structured settlement. A clause that allows the payments to continue in the event the primary recipient passes. This will keep the agreement in place to ensure the total settlement is paid to the estate or other party that may have been part of the agreement.

In conclusion, your structured settlement should be based not only the immediate needs, but also have enough flexibility built into the agreement for the future. Your financial settlement advisor should be able to setup the settlement with you to help ensure the benefits of the agreement are realized over the life of the individual receiving the annuity.

3 Types of Structured Settlement Payouts - You Decide