What Is A Structured Settlement Or Annuity

A structured settlement pays out money owed from a legal settlement through periodic payments in the form of a financial product known as an annuity.

What is a structured settlement or annuity.

When used properly they can be a very effective tool for protecting a settling plaintiff s long term financial security. The key difference between an adult owning a structured settlement and a minor owning one is control. Instead of receiving all the money in one lump sum the plaintiff puts their money in an annuity which is a type of financial contract. The difference is annuities are bought and they come through investment firms and insurance companies.

A structured settlement annuity contract often yields in total more than a lump sum payout would because of the interest the annuity may earn over time. Structured settlement annuities are designed to offer the benefits of a structured settlement while reducing or eliminating the potential drawbacks. How does a structured settlement work. Structured settlements for minors are usually paid through an annuity from a life insurance company just as for adults.

A structured settlement is not an annuity. A structured annuity also known as a structured settlement or a periodic payment judgment is an annuity or group of annuities with a very short accumulation phase funded by a lump sum payment similar to a single pay annuity. You ll find that lottery winnings can be paid out in the form of an annuity to stop the winner from spending too much. Cons once the terms of a settlement are finalized there s little you can do to alter them if they do not meet your needs.

Structured settlements don t offer the benefit of having your entire settlement amount available to you and you won t have the opportunity to invest the money at your own discretion but a qualified structured settlement broker can structure the qualified funding asset in most cases an annuity to meet your present and future needs as well as the needs of your family. You cannot renegotiate the terms if your financial situation or. The annuity is an irrevocable stream of regular payments from an insurance company that is structured in a way dictated by the court system. A structured settlement annuity is a way for someone who wins a legal settlement to receive the payout.

After the settlement money is negotiated and come to final terms the court order will request the funds to be placed into a type of income annuity contract called structured annuities. However many legal settlements offer a lump sum payment option which provides a one time sum of money.