Why Structured Settlements are Better than Cash Settlements

Structured Settlements – Good Choices for People with Limited Financial Planning Experience

Structured settlements are annuity policies that are generally given to winning plaintiffs of personal injury claims. These types of policies provide payments for a certain period or for the lifetime of the recipient. In turn, recipients can meet any future financial obligations without worry. Regular payments are often preferred over a cash settlement, especially if the recipient has limited financial planning experience.

Annuity Payments are not Taxed

In addition, the money from the annuity payments (including any interest earned) are tax-free on both the Federal and state level. On the other hand, taxes are assessed on the earnings earned on investments of cash settlements. Therefore, if you accept the settlement payments, you can enjoy substantial savings and optimize the worth of your settlement money.

You Have a Good Deal of Latitude with Respect to Payments

If you win a personal injury claim or are awarded a settlement amount from an insurance company then, it’s in your best interest to select a structured settlement over a cash settlement. A structured settlement gives you a good deal of latitude with respect to payments. For instance, you can choose to receive the tax-free money on a monthly basis or every year for a specific length of time. In addition, payment amounts can stay the same or be adjusted for inflation.

Other Benefits of Receiving Payments by Way of an Annuity

Whatever time period you choose to receive payments, they are guaranteed. In addition, structured settlement payments do not come attached with the money management charges of other types of investments. If you choose payments to be made over your lifetime, then you don’t have to worry about outliving your money.

Choose a Structured Settlement over a Cash Settlement if You Don’t Need the Money for any Large Financial Expenditures

So, if you can afford to do so, or don’t have any large financial purchases to make, a structured settlement is often the best choice when obtaining a reward for damages for a personal injury claim or case.

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