The Pros and Cons of a Structured Settlement


Every year, millions of people are injured in car accidents, workplace accidents, slip and fall injuries, medical malpractice, and other accidents. When these victims file personal injury lawsuits and win, they often receive a settlement from the insurance company.

These settlements are typically structured in two ways: a lump-sum payment or a structured settlement. A lump-sum settlement is just that: you get your full payment in one lump sum. A structured settlement is paid out over time.

There are pros and cons to each of these settlement options. Today we’re focusing on structured settlements. Read on to learn more.

Structured Settlement: Pros

Becuase personal injury settlements are not taxed, there are tax benefits available.

Structured settlements also eliminate the possibility that you spend all of your money at once. They are paid out over time and you are guaranteed a certain payment each year.

If the company paying your structured settlement goes bankrupt, most states have a safety net that allows for these payments to continue. This means you don’t have to worry about the company going out of business and leaving you high and dry.

Structured settlements can be helpful when plaintiffs and defendants cannot come to an agreement. They can allow an agreement that the insurance company can live with since they can pay it over time.

Additionally, you could also opt to sell your structured settlement if you need the money immediately. Learn more about selling structured settlements at

Structured Settlement: Cons

When deciding if a structured settlement is right for you, consider the cons as well. Some parts of your settlement may be taxed, such as punitive damages, attorney fees, and emotional damages.

A structured settlement may cost less than a lump sum payment. This means that insurance companies may get off easy and not have to pay as much if you opt for a structured settlement. It’s also possible that the structured payments may not be enough to cover future expenses.

This type of payment is not best for people who need to spend a large amount of money upfront. If you have to retrofit a home to be handicapped-accessible or buy a vehicle that can accommodate a wheelchair, you need the money soon.

Structured settlements may also impact your ability to receive food stamps and other benefits. Check with your state before you accept a structured settlement.

Is a Structured Settlement Right for You?

A structured settlement has both pros and cons and to understand whether it is right for you, you should speak with an experienced attorney. They can advise you whether your situation would benefit from a structured settlement or if you should opt for a lump sum payment.

If you found this article informative, be sure to check out more of our legal articles before you go. We cover plenty of different topics for any questions you may have.