Don’t Believe Everything You Read About Structured Settlements

There is a wealth of information out there regarding structured settlement annuities. Much of it is informational, and with the help of a trusted advisor, claimants involved in personal injury, wrongful death, and workers’ compensation cases can use a structured settlement to preserve their long-term financial stability. Unfortunately, as is the case with almost any topic these days, there is a significant amount of misinformation on the web when it comes to structured settlements.

Take this Huffington Post article for example. In it, the author writes,

“A structured settlement is exactly the same as a lump sum, except the amount is paid out in installments, rather than all at once.”

What’s the truth? Structured settlement annuities DO provide claimants with a series of installment payments, but they AREN’T the same as a lump sum. There are significant advantages to a claimant placing all or a portion of their settlement proceeds in a structured settlement, rather than accepting the entire settlement as a lump sum:

1. 100% tax-free income: Whether a claimant accepts an injury sum as a lump sum or decides to use a structured settlement, the proceeds are income tax-free. However, if any money from the lump sum is placed in a traditional investment, the growth on the investment is taxable. Any growth on a structured settlement annuity is tax-free.
2. Guaranteed¹ return: A structured settlement annuity has a fixed rate of return. Even if the market takes a dive, the claimant does not have to worry about their structured settlement doing the same.
3. Flexible design: Structured settlements can be designed to provide monthly, quarterly, bi-annual, or annual payments, and can also pay out in a few future lump sums. Payments can remain equal over the life of the structure or can be designed to increase or decrease over time. They can also include a large payment or be delayed to begin paying out at a date in the future.
4. No overhead: Most traditional investments have a certain amount of overhead costs associated with management and administrative fees; structured settlements do not. When considering the lack of fees combined with the guaranteed rate of return, structured settlements stand up to traditional investment in terms of value.
5. Protection from dissipation of funds: The settlement of a lawsuit marks an emotional time for many claimants. Unfortunately, we don’t all make our best financial decisions when we are in an emotionally vulnerable state. A structured settlement can help protect settlement proceeds from being spent too quickly.

Trust our structured settlement experts

Our team helps educate injured claimants on all of their available settlement options, including structured settlement annuities. To learn more, contact us today at 800-354-2258 or info@tracikaas.com.