Structured Settlement Financing

Written by Jacey Harmon
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Structured settlements provide for payments to be made to a claimant over a period of time. In most cases, structured settlements are used to settle personal injury claims. Large medical bills and loss of income are often a result of suffering an injury. The settlement finances payments for medical bills, living expenses and possibly education.

The insurance company finances the settlement with a lump sum immediate annuity. The settlement may include for a variety of different annuities to be purchased. The insurance company may be responsible for financing an annuity that will provide for lost income as a result of an injury. Almost every structured settlement will include an account that provides financing for immediate and possibly expected future medical expenses.

Settlement Financing for Individuals

Individuals who are receiving a structured settlement may use the payments to finance a variety of activities or bills. As noted above, medical bills are common with structured settlements and the settlement will provide funds to cover the bills. In some cases, the settlement can allow for financing of education of minor children. Financing of homes and vacations may also be considered when receiving settlement payments.

If an individual does not desire to utilize the periodic payments involved with structured settlements, they can receive financing from a third party. The third party provides a lump sum of cash in place of all, some, or part of future payments. There are a variety of reasons to consider this financing option. Starting a business, better investments, and offsetting inflation are all reasons why people choose this route.


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