A structured settlement is insurance or a financial arrangement that a claimant gets. When a claimant settles a claim for a large sum of money, the lawyer or a financial planner may advise to take the amount in instalments over a period of time rather than taking the amount as a lump sum payment. When the claimant gets the amount in instalments it is known as structured settlement. Most of the times the structured settlement is created by purchasing annuities, so that there is a guarantee on the future payments.
The claimant can choose the schedule of payment as they wish it to be. The system of structured settlements has many advantages. The major benefit of the same is that it helps avoid tax. The tax obligations of the claimant reduce significantly with the correct set up of structured settlement. With the help of structured settlements one can provide for the future financial problems or needs they know of which will arise in times to come. The structured settlement is a good way to manage money also as there are many people who are not good at handling money. Having a huge amount suddenly can cause unnecessary expenditures leaving the claimant with no money for future use when he actually needs it.
Many times minors also get structured settlement and it is very helpful for them to save it and keep it for the future for their education and other needs in their youth. Structured settlement to an injured person is also very beneficial. An injured person will need money for his treatment and also to fend for himself and the family for the time he will be out of work. The instalments and the money that come to him at regular intervals will be very helpful to him.
There are some claimants who opt to go for structured settlement but are not very happy with the system as they feel trapped. They do not like the system to receive payments at periodic intervals as they feel that they have to plan all expenses keeping in mind the times they will receive the payments. They are also not in a position to borrow any loan against the future instalments that they will receive in the future if they want to buy a house or any other expensive item. The system of structured settlements as its own advantages and disadvantages, but for sure is an effective way of settlement.