gavel and walletMore and more personal injury plaintiffs are choosing structured settlements in order to be compensated for the harm and losses they have suffered. But how can you know if a structured settlement or lump sum disbursement is right for you?

Below you can learn several things to consider when choosing the right settlement disbursement option for you and your family.

Settlement Disbursement Options

When a personal injury case settles, you have the option to have your settlement disbursed all at once – this is referred to as a lump sum payment.

If you accept the payment as a lump sum, after attorneys’ fees and expenses, and after medical liens and lawsuit loans are paid off, you can take that money and invest or spend it as you wish.

On the other hand, you also have the option of receiving all or part of your settlement as a series of payments over time – this is called a structured settlement.

So for example, if you were injured in an auto accident where you suffered significant permanent injuries, you might receive a settlement of $1.2 million. But instead of receiving the money all at once, you and the liable party’s insurance company might negotiate a settlement in which you will be paid $5,000 per month for the next 20 years.

The idea is that the insurance provider feels that it can invest the settlement and that their investments will be so great that over those 20 years, they can make all of the payments to you and perhaps even generate additional money for themselves.

In Which Cases Are Structured Settlements Most Common?

Structured settlements are frequently employed in personal injury cases where the claimant will have a lifelong disability and/or require lifelong care. They are also commonly applied to cases in which there is a minor who has considerable damage and cannot receive a lump sum payment until the age of 18 anyway. Structured settlements are, on the other hand, rather uncommon with smaller personal injury claims, especially if they involve adults.

The Advantages of Structured Settlements

A Structured settlement will allow you to do a number of things, chiefly:

  • Ensure that you will have money available for years to come. This money will be available to support your family, for your living expenses, and/or pay for long-term care or future medical expenses.
  • Structure your payment to fit your particular needs. You can choose to structure all or part of your settlement and to decide how long, in which amounts and with what frequency you will receive payments.
  • Protect yourself from exploitation and/or bad financial decisions.  Anyone who has received a large quantity of money should be wary of unscrupulous business or investment offers, as well as family and friends looking for handouts.

So Why Choose a Lump Sum Payment Instead of Structured Settlement?

There are a number of reasons why a plaintiff chooses a lump sum payment over a structured settlement, most often because they believe that they can better invest the money or because they have immediate financial needs.

If you are financially savvy and have a good idea of how you want to invest the money, you may choose to receive a lump sum payment that will provide you with full control over how and when your money is spent or invested.

Likewise, you may have certain expenses that you need to pay off or something special that you want to do for your family such as:

  • Buy a home
  • Purchase a vehicle you need
  • Pay for your children’s education
  • Pay for medical care not covered by insurance
  • Pay off outstanding bills
  • Consolidate high-interest debts

Every personal injury case is different, and your family’s needs will vary from those of the next. For this reason, it is very important that when deciding upon the right settlement disbursement option you work with a professional who specializes in structured settlements. Contact Herman, Herman & Katz, LLC Attorneys at Law by calling 504-581-4892 or by filling out our free, no obligation case review form.

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