Structured Settlement

Published: | Updated: April 4, 2018

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Definition - What does Structured Settlement mean?

A structured settlement, in the context of insurance, is an agreement wherein the claimant or injured party accepts compensation for damages in periodic payments as opposed to one lump sum. The insurer of the at-fault party typically funds a structured settlement annuity for the injured party.

Insuranceopedia explains Structured Settlement

Given that many parties tend to spend lump-sum settlements within five years and sometimes need to seek government assistance afterward, a structured settlement can act as a safety net and provide long-term financial security. Furthermore, a structured settlement annuity can be tailored to meet the injured party's short and long-term needs. It may mimic a paycheck, for instance, or be scheduled to coincide with known expenses, such as upcoming bills, education costs, or retirement. Lastly, accepting a settlement often represents a quicker, less expensive, and less stressful option to a trial. Nevertheless, it may be necessary to seek the counsel of an experience personal injury attorney to determine whether a structured settlement is the best course of action.

This definition was written in the context of insurance

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