What Is Structured Settlement Annuity? Definition Explained

What Is Structured Settlement? – Structured Settlement Annuity Definition

Structured Settlement Annuity Definition:- A Structured Settlement is a kind of Annuity that pays out an award from a civil lawsuit by spreading the payments out over a long period of time. A structured settlement surely does offer a reliable future financial guarantee as compared to a lump-sum payment given all at once.

What Is Structured Settlement Annuity?

Structured settlements, while some call it, structured annuities, but basically both are a kind of financial terms of the settlement and legal judgments. Although they both function like individual assets to some extent, they are still bound to follow a few complex regulations.

Suppose, if you’ve been in an accident, won or settled a lawsuit, or might get a huge jackpot sum from a lottery, you may receive a Structured Settlement Annuity. This Structured Settlement Annuityimpiles to a settlement where the receiver will receive the settlement in various monthly installments instead of a one-time lump sum payment.

The time period of the payments or installments in a Structured Annuity Settlement contract can vary from 20-30 years or even until the death of the beneficiary.

If the amount of money is considered quite small, then wronged party might have the option to receive an entire sum of settlement. For larger sums, however, a Structured Settlement Annuity may be arranged.

Structured settlements are manageable. Many lawsuits result in someone or some company paying money to another to right a wrong. Those responsible for the wrong may agree to the agreement on their own, or they may be forced to pay the money when they lose the case in court.

How Do Structured Settlements Work?

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In a structured settlement deal, payments pay out money owed from a legal settlement through pre-defined periodic payments in the form of a financial product known as an annuity. Though many structured settlements offer a choice of whole payment once as an alternative, the key differences between both kinds of annuity settlement options lie in their long-term security and the taxes.

For instance, money received in a personal injury case is generally tax-free when you receive it. However, once the money in your bank account, you’re liable for taxes and dividends from that sum of money. It is easier to Sell Structured Settlement Annuity of such type.

Sell Structured Settlement Annuities:-

Now in case if you can see any forthcoming important expense, debts, or bills, you may need your cash in hands and you may also think how to sell structured settlement annuity. Good news, there are many services or companies to whom you can Sell Structured Settlement Annuity easily as they will happily Buy Structured Settlement Annuities in exchange for a single cash payout.

In fact, you may have seen a business or even been contacted by one of these companies since they market their services aggressively. Several brokers will offer you different models of structured settlement loans also. In such circumstances, you can mortgage your structured settlement for cash, just like you do with a loan for any other possession.

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You can sell the whole of your structured settlement or even just a part of it. Many factors affect the amount you will eventually receive, along with the total amount of the settlement, the number of payments you’re selling. And also, how often these payments are made.

The process for selling a structured settlement is long and needs to be approved by a court. Usually, it takes two to three months to complete a sale.

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How do you Get Structured Settlement Annuity?

There are a number of reasons why a person may receive a structured settlement. You should recognize the reason that suits your circumstances in the most suitable way of receiving your Structured Settlement Annuity so that you can use it in the best possible way.

The most common cases of Structured Settlement Annuity are:

  • Personal injury:- in case of a Personal injury, a civil case is filed where someone who’s been harmed files a lawsuit seeking money from the person believed responsible for the infliction. Here structured settlement money helps the victim to pay for medical expenses and various other kinds of costs.
  • Workers’ Compensation:- Many people are aware of workers’ compensation, which pays workers who get injured on the job while they heal. Payments can be used for medical treatment and salary replacement during periods when injured employees are unable to work and other expenses.
  • Medical malpractice:- In some unfortunate cases, doctors can do more harm than good. In this instance, injured patients or the families of deceased patients can sue for medical malpractice.
  • Wrongful Death:- The structured settlement annuity is also a common way to recompense family members, who claim their loved ones were victims of wrongful death. Those families may be entitled to receive a series of tax-free payments, in order to replace income after a loved one’s death.

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Options for Structured Settlement Annuity Owners to Sell Payments

While considering the terms of your Structured Settlement Annuity because they can’t be renegotiated after the contract has been signed, finalized and issued. Anything out of order in this contract can adversely limit your options if your financial situation changes due to unemployment, illnesses or other difficulties.

Though, annuity owners do have an option to get cash in advance of their contract schedules. Owners may Sell Structured Settlement Annuity partially or even completely to a structured settlement buyer, who is willing to Buy Structured Settlement Annuities of such manner.

All such kind of sales or process to Sell Structured Settlement Annuity requires an approval by a judge. Then judge finally decides if the sale of that Structured Settlement Annuity will actually be beneficial for the annuity owner or not.

The judge will also finalize a set of other rules that may apply over the deal, which would highly depend on the details of your annuity contract and also on the laws of the respective state. The Structured Settlement Protection Act of 2002 provides various federal guidelines to be followed on such deals.


All the information in this guide is of general in nature and is intended for informational purposes only; it is not legal, health, investment or tax advice. We at, Bestinsurancetips.us make no representation as to the accuracy of the information provided and assumes no liability for any damages or loss arising from its use. It is advised to get a professional consultation.

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