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Lump Sum Settlements vs. Structured Payouts: Which Is Best?

September 18, 2018

The end of the rainbow for any personal injury case is a payment of some kind (at least in the cases that are successfully won). However, plaintiffs have to decide if they would like to receive a lump sum payment or perhaps get a structured settlement as available in certain cases. Now, most of the time the lump sum payment is going to be the only option that the plaintiff has, but there is at least some chance that a structured settlement may be in the works. You should know how each works so that you may determine which is best in your particular circumstances.

Structured Settlement

A structured settlement option may be available to you in certain circumstances, and you may have your own reasons for selecting it. Generally speaking, it is not the course that most choose to take as most would generally prefer to receive their money right now. However, in a structured settlement scenario, you will receive some lump sum of payment now while the remainder of the payment is deferred to a later time.

The defendant in this case will transfer the total of the amount to be paid to you to an insurance company that will then make those structured settlement payments to you on a regular schedule. You will want to make sure that the insurance company that takes this often is financially sound themselves to protect yourself from their possible bankruptcy. If they go bankrupt, then you lose out on that structured settlement at the same time.

Lump Sum

As already alluded to, many have no choice but to go with a lump sum payment for their particular situation. There is nothing wrong with that, and it does allow you to start using the money that you have received in any manner that you deem appropriate. At the same time, you will need to be aware that you will be walking away from the possibility of receiving payments over the course of years as you would with a structured settlement. You get all of the money right now, and you have to be the one who is responsible for it. If you end up wasting it, then you are just going to have to deal with the consequences of that action.

The Bottom Line

Most of the time a lump sum payment is the better option for people. It is also often the only option that they are presented with, so the choice is made for them. The reason why it is one that should be preferred is because it doesn’t require that you stick around and wait for a long period of time to receive the funds that are rightfully yours. You do also not have to take a gamble that the insurance company is going to go broke at some point in time while you are waiting on some payments to finish up. These are the types of things that are important to most people, and they should be important to you as well.

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