In order to fully participate in settlement negotiations with another party, it is essential to know some of the most common and important terms of a settlement cheque payout.
The following terms play a significant role in determining how compensation for an injury or injuries will be received:
Payment schedule: A settlement can be paid out in two ways: either as a lump sum payment, or as a structured settlement that follows a payment schedule (weekly, monthly, quarterly, or annually). A personal injury lawyer may negotiate a mixed structured settlement that includes a combination of two or more payment schedules.
Decreasing payments: A payment schedule may start with high payments that decrease over time, if agreed upon. This is commonly used in situations where healthcare costs are expected to decline over time, or in wrongful death cases in which a minor receiving payments reaches adulthood.
Increasing payments: As structured settlements allow you to earn interest, payments can increase over time to account for inflation. Personal injury cases can also be settled to have the payments increase over a defined schedule. This is especially beneficial in situations where healthcare costs are expected to rise.
Initial lump sum: Structured settlements often include an initial lump sum that is substantially higher than the rest of the payments. This lump sum helps to cover the costs of attorney fees and initial medical expenses.
Final lump sum: Structured settlements may also include a larger payment at the end of a payment schedule. While this is not as common as receiving an initial lump sum payment, it can be used in wrongful death cases to help an adolescent pay for university or to help a young adult make a down payment on a home.