Structured
Settlements
You have probably heard the term “Structured
Settlements” on a TV ad and wondered what exactly it meant.
It's not one of those terms you here every day...
Welcome to Structured Settlement
Payout
What is a structured settlement? To put
it simply, a financial package that permits a
settlement to be paid in regular payment (installments) for either a
for a life time or a set period of time. Still
confused? Generally, a structured settlement is a package
that is different from person to person and that's where we can help
you. Some structures include immediate payment to cover any special
damages that may have occurred or will occur. We'll help you
decided which type of structured settlement is best for you.
While it may seem a little strange at first, the structured
settlement system was first introduced in
Canada in the early 1970’s and of course it
spread to the US
very quickly. After a few years, the idea had found its way
to many
countries (including Australia) and most member states of the EU.
What are the Benefits of a
Structured Settlement?
The biggest advantage of a structured settlement
annuity is that it provides a secure payment stream that
is tax-free over a period of time. In reality, most
investment options (think bonds and stocks, or savings accounts) can
not match the security (or the flexibility) of a
Structured Settlement Annuity.
The main reason for this is that a structured settlement
annuity can be tailored so that payments are made over an
extended period. If the recipient was to die, a guaranteed
portion of the settlement would normally be paid
to the person's estate or to a named beneficiary.
What are the disadvantages of
Structured Settlements?
Now you have some idea of what a structured settlement is, I'm
sure
you can begin to see the benefits of structuring a payout in
this
way. However, sometime a lump sum might be a better option for example
to purchase a house, or pay off existing debt. In these
circumstances (where the long term savings would outweigh any benefits
from a Structured settlement annuities), you should seek advice
beforing committing to many of the available alternatives.
As always, it's good to be informed, you don't want to
unwittingly
sign away a huge portion of your payout through poor research.
A structured settlement is nearly always the best
option
unless you are the beneficiary of a huge windfall (for example, a
lottery win).
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