Structured Settlements:Structured settlement is a contract made by the insurance company to the injured party, promising to pay all or part of the settlement in future periodic payments. The structured settlement is awarded mainly to maintain your previous life style and to meet the demands of your future needs. The money will be paid in the form of annuity. If you are an injured party, you approach a structured settlement attorney to sue the person who had caused the accident, and to sue the person’s insurance company. The attorney and the insurance company negotiate the amount, type of settlement, and the funding of structured settlement before entering a contract with the insurance company. Structured Settlement Payments:In a structured settlement, an initial payment is given to meet out your immediate medical expenses which is usually a limited amount and the remaining amount in future periodic payments along with interest to meet out the necessary needs of the claimant.
You have to work out with the insurance company about the duration of the future periodic payment whether it is for a particular period or for lifetime. The duration depends on the type of annuity, which you select, whether it is for a lifetime annuity or for a fixed period of years. Then the mode of payments to be paid should be decided whether it is weekly, monthly, quarterly, half-yearly, or annually. Once mode of payment and duration are selected at the time of settlement, it will be firm and the same cannot be changed later. You can purchase the annuity with some percentage of increase in payment every year, in order to fight the inflation. As far as interest on annuity is concerned there are two types of interest. One is fixed and the other is variable. In fixed type your interest remains fixed till the coverage of annuity whereas in variable type the interest varies according to the market value. The future periodic payments are tax-free. Supposing the claimant dies before the completion of the settlement time, the amount will be paid to claimant’s heirs or his/her beneficiaries. |
