A structured settlement is a large sum of money that is dispersed over a period of time rather than given in one large amount. Many times an agreement between an individual and the payer elect to have a set amount of payments made over a period of time. The recipient will receive the overall amount in monthly or yearly draws to spread out the payments for tax or other financial planning reasons.
structured settlements can be generated from lottery winnings, litigation or insurance awards from workers compensation. In some cases you can inherit an annuity or monthly payments that provide an income stream for a period of time.
As with any type of arrangement, there are advantages and disadvantages of a setting up settlement depending on the goal of the individual and those around him. If you are in a situation where you need to make a decision on receiving a structured settlement, you may want to consider the following:
When setting up a structured settlement, it is recommended that you have a reliable attorney to assist in the planning and terms. It is important to select an unbiased party who so that your best interests are negotiated properly and you have all the information to make a justified decision before accepting the terms of the agreement.
When setting up an annuity, companies will pay large commissions to the person who referred the company. Ensure your attorney is not recommending a provider that may provide him or her with a fat commission, unless it is in your best interest.
Ensure the agreement you have with the insurance company that is offering the annuity does not charge you with high end fees and commissions. These fees can tap into your principle, leaving you with less money in the long run.
In summary, when you receive a structured settlement, ensure you are well versed in the setup and terms of the agreement. Utilizing an unbiased attorney who does not derive a referral fee from the insurance company will keep them honest and your best interests in mind at all times.
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