Do you have a structured settlement or annuity? If you’re not sure, ask yourself the following question:
Are you receiving payments from an insurance company?
Perhaps you or a family member were involved in a personal injury claim, medical malpractice case, wrongful death lawsuit, negligence or other lawsuit where monetary compensation was awarded to you as part of the settlement.
Sound familiar? Then you may be the recipient of a structured settlement or annuity.
How it Works
When a settlement is reached the person responsible for the injury (the defendant) agrees to pay monetary compensation to the injured party (the claimant).
The mutual agreement that often results is called a structured settlement agreement, where the compensation is paid out in a series of payments over a set period of time, rather than in a single lump sum amount.
The payment responsibilities in this type of agreement are usually assigned to an independent third party such as an insurance company. So it’s often an insurance company that takes care of the actual administration of your checks, not to mention the record-keeping of the payments.
In many cases, settlement payments are scheduled on a monthly basis. Other times, the agreement may call for periodic amount increases over time. Every agreement may be structured differently.
The Pros and Cons
One benefit to structured settlements is that they are usually designed to be tax efficient. However that typically goes hand in hand with longer payment terms and slower payouts.
When all parties agree to a settlement agreement it’s important to understand that no matter how your current situation may have changed, the terms of your original agreement cannot be changed by the insurance company or the defendant in the lawsuit. But, that doesn’t mean your financial circumstances cannot be adjusted.
Many recipients run into unexpected circumstances that require more frequent payments or larger payment amounts than their settlement currently provides. You should know that alternative solutions are available to you, like those offered by our team here at SenecaOne, which can help you improve your payment stream as needed.
If you’re currently receiving payments from a structured settlement and are looking to improve your financial circumstances, give SenecaOne a call today. We’ve helped thousands of people change their financial lives for the better and we can help you too. 1-800-513-1394.