What Is a Structured Settlement for a Car Accident?
Traditionally, claimants involved in a car accident wait for resolution of their cases and receive a lump-sum payment. A structured settlement refers to a contract between a structured settlement company and the accident victim. The company agrees to pay out money to the victim over a period in exchange for the lump sum award.
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Significance
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Individuals who have sufficient financial resources can afford to wait for claim payouts. However, people temporarily or permanent disabled because of a car accident may want to consider a structured settlement to help for long-term care, living expenses and medical costs. Often, surviving spouses and dependents may rely on the income of individuals who suffered fatal injuries in vehicle accidents and may want to consider a structured settlement.
Function
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Generally, a person can receive structured settlement payments monthly, quarterly, yearly or as otherwise agreed. The payout comes from one or more annuities purchased from highly rated life insurance companies, or U.S. Treasury bonds. A package may consist of the payment of cash in advance, a medical expense annuity, income annuity, educational fund annuity and an annuity for special accounts, such as home improvements.
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Benefits
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Some individuals prefer the comfort of knowing they will receive a check in the mail at designated times. This eliminates the risk of spending the money too soon. Even after entering a structured settlement, some people may ultimately decide to sell the structured settlement for a lump sum. Still, others depend on their skills to manage and invest their own money; therefore, getting more of a return over the long run.
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References
- Photo Credit car crash image by dawn from Fotolia.com
