You may have wondered what structured annuity settlements are and if you should obtain one.
In the past, there was a huge chance that winners of large settlements from liability lawsuits could lose access to Medicare or Medicaid due to large payments from the settlement. This could be a serious problem for someone with significant medical costs.
Without health coverage from Medicare or Medicaid, health related expenses could quickly eat away at the settlement, leaving no money for other necessities. Due to the fact that most of these lawsuits resulted from work related injuries that prevented people from going back to work, this obviously presented a real danger.
To solve this problem, structured annuity settlements were developed. In a structured annuity settlement, the settlement from a liability lawsuit is taken over by an insurance company. They take the settlement and split it in to a number of payments to be paid periodically through out a person’s life span. Furthermore, the recipient of the payments also receives money created through interest as well as returns from how the insurance company invested the settlement.
This leaves a number of very strong advantages. First off all, due to the plaintiff receiving these payments like a regular income, they are likely to still be able to stay enrolled in Medicare and Medicaid. This way the plaintiff’s health care expenses will be paid for, and the plaintiff will have plenty of money left over from the settlement payments to pay daily living expenses. They will probably even have significant money left over for recreational expenses, investing, or saving for the future.
Another significant advantage a structured annuity settlement provides is that many people are not adept at managing large sums of money. Receiving payments over a lifespan helps alleviate this budgeting problem. It also produces more money through interest and investment that the plaintiff would not receive immediately through a lump sum payment.
However, some people may some day decide they do want a lump sum so they can enjoy all that money in a shorter period of time.
Thankfully, there are many companies out there who buy structured settlements. A structured settlement sale is made when a company purchases the settlement in exchange for that lump sum of money. The company who purchased the structured annuity settlement will now receive the settlement payments instead and receive the extra cash from interest and investments. The seller receives the lump sum and gets to spend a lot more money at one time then they would be able to normally.
Structured annuity settlements provide many great benefits to plaintiffs. However, if a plaintiff suddenly changes her mind, she can still sell it and receive that lump sum.
