Structured Settlements refers to an agreement between the insurance company and the individual who meets with an accident. The insurance company agrees to pay the victim a predetermined amount of cash for a fixed interval. These settlements are designed to help individuals get assurance and liquid cash to pay for their structured settlements and annuity payments. The key benefit is saving on tax. With apposite set-up, this kind of settlement significantly reduces the plaintiff’s tax obligations and in some cases becomes tax-free.
A pre-arranged settlement can guard an applicant from deteriorating their funds. They can save for the rainy days. Sometimes they are also beneficial to the claimant when he falls short of money in future. Minors also benefit from it. Some cash is provided during their growing years. An additional payment is made for the rising educational expenses and more disbursement on maturity of the child. An injured person who requires purchasing special medical equipments for his health can enjoy the benefits of periodic lump sums. At times entering into a lump sum amount can be harmful to the existing financial conditions.
In some situations, it is better to set up a special needs trust. Some people are trapped by the periodic payments or settlements because they are unable to muster the resources when planning to buy new homes or expensive cars. Many investments have ample results in the long run. Therefore, some people will accept a lump sum amount and invest in themselves to enjoy the future gains.
