Structured Settlement Money

Written by Jacey Harmon
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Structured settlements provide money for individuals in basically one form, through periodic payments. There is another way that a structured settlement can provide cash for the settlement beneficiary. Assigning future payments to a third party for an immediate lump sum of cash is another way to receive cash from a settlement. This type of transaction is often called "selling" of the settlement or payments.

There are some benefits for a person to consider when deciding to accept a structured settlement. The periodic payments create a reliable income stream that can be used for anything from vacations to mortgage payments. The total of the periodic payments will likely be higher than the offered lump sum. The income is typically not treated as taxable income for the IRS to get their hands on.

As with anything else in life, structured settlements have disadvantages. One of the drawbacks directly relates to one of the benefits. The total amount received over the life of the payments will be higher than a lump sum but each payment will lose value to inflation. The loss of value over time somewhat offsets the benefit of a higher payment total. The cash that is funding the payments is owned by the insurance company, not the individual. This means that you can not access the account if you need a higher sum of money than the payment.

Receiving Cash for Settlement Payments

Since a person does not have ownership of the funds that are providing the payments one can not "sell" the settlement. Instead a beneficiary can assign whoever they want to receive the payments. This allows a person the opportunity to use the future payments as leverage in receiving immediate funds. A business will offer a lump sum of cash in exchange for future payments. This type of transaction can be very beneficial if you need to access the future payments.


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