Structured settlements are becoming increasingly popular among insurance companies, plaintiffs, and defendants.
There are many benefits to structured settlements. For the recipient, the structured settlement is a guaranteed flow of creditor-proof and tax-free payments that can last for years, and sometimes even for life. For insurance companies, the cash requirement to buy the structured settlement annuity may be lower than the damages awarded.
Another benefit of structured settlements is that they can be very flexible in design. Some examples of this flexibility include:
Payments can be designed to increase at specific points in time, such as when future medical payments are expected.
The payments can be linked to the Consumer Price Index to offset inflation or they can be indexed at a fixed interest rate.
Future payments can include a series of lump sum payments.