What is a Structured Settlement?
A Structured Settlement is a method of paying damages to a plaintiff (the injured party) over a period of time when a lawsuit has been settled. A structured settlement most commonly results from a personal injury lawsuit involving:
- Product liability
- Motor vehicle collisions
- Wrongful Death
- Medical Malpractice
When the outcome of a lawsuit results in a settlement, the damages awarded are funded in the form of an annuity contract issued by an insurance company. This settlement is structured as follows:
- A company (typically an insurance company) is selected by the defendant to structure the settlement.
- The structured settlement company purchases an annuity contract and sends payments from the annuity to the plaintiff. The payments are fixed in time and amount.
- The structured settlement company retains ownership of the annuity even though the plaintiff is the beneficiary.
Plaintiffs receiving a structured settlement can benefit from the sale of their stream of payments by receiving a lump-sum of cash.