Benefits of Structured SettlementBenefits of Structured Settlement
Structured settlements offer accident victims and their families a tax-free stream of income to cover medical expenses, replace lost income or provide future financial security.
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Structured settlements offer plaintiffs flexibility in establishing the payment schedule that best meets their needs, whether that`s starting off small and increasing over time, or decreasing as their needs decrease.
Tax-Free Income
Structured settlements help injured parties obtain regular income by spreading payments over multiple years instead of receiving one large lump sum, which could easily be misspent. Structured settlements allow people to pay for their living expenses without relying on government support.
The Periodic Payment Settlement Act of 1992 encourages structured settlements in physical injury and wrongful-death cases. Congress has also extended their use to workers` compensation settlements. The Internal Revenue Code also contains tax benefits.
The Security of Your Own Home
Structured settlements offer many advantages, with long-term financial security being chief among them. It is especially useful for those with long-term medical conditions or needs.
Structured settlement payments differ from lump-sum awards in that they are fixed and guaranteed by an insurance company that issues them, unlike lump sum awards which vary with market fluctuations. In addition, many states have insurance guaranty associations that protect these obligations in the event of an insurer`s bankruptcy.
A guarantee that payments will continue, no matter how the market changes, is a good way to protect against creditors and financial predators.
Flexibility
Structured settlements offer numerous payment options that meet the needs of many people, from monthly, quarterly or annual installments – you decide the frequency and size of each one – all the way up to annual installments that suit you personally.
Structured settlements offer another advantage by enabling you to adjust payments to suit your unique financial circumstances and future needs. For example, increasing payments if additional money is necessary in the future to cover medical bills or family needs could be advantageous.
Remember the risks associated with structured settlements. For example, selling the settlement for a lump-sum could cause you to lose certain tax benefits under the Periodic Payment Settlement Act.
Reliability
Structured settlements offer your client guaranteed funds at a set date and amount, as well as meeting both short- and long-term health care needs.
The reliability of an experiment or measurement is the consistency in the results. For example, if you measure someone`s weight multiple times you should always get the same result.
When conducting research or creating tests, reliability should always be kept in mind. Make sure your questions and measurements don`t vary depending on the mood or concentration of participants.
Control
As opposed to receiving one lump sum payment, structured settlements give you more control of your money, enabling you to invest and withdraw large sums as necessary or use it towards purchases when needed.
Structured settlements also offer tax-free income for injured victims and their families, which is another major advantage. The Periodic Payment Settlement Act from 1982 exempts nearly all structured settlements resulting from personal injury suits from US federal income taxes.
Structured settlements are periodic payments, also known as annuity payment, which can be in equal, increasing or decreasing installments.