How do structured settlement companies work?

When the defendant and plaintiff agree to resolve a lawsuit with a structured agreement, the parties negotiate a cash amount payable by the defendant in exchange for the plaintiff to withdraw the lawsuit. The money is distributed as a series of periodic payments, usually financed through an annuity.

Structured settlement

purchasing companies, also known as factoring companies, provide services to those who sell their structured settlement payments. These companies offer deal owners lump sums of cash in exchange for rights to future payments or parts of future payments.

These transactions between the holder of the settlement annuity and a third party are what is called a secondary annuity market. Statutory settlements can be paid in a single lump sum or through a structured settlement in which periodic payments are made through a financial product known as an annuity. If you choose to receive payment for your lawsuit through a structured settlement, you can determine if you start receiving the funds immediately or at a later date. The settlement is then spread out into a series of periodic payments over an agreed period of time rather than a one-time payment in most cases.

Instead of paying the cash to you or your lawyer, the defendant will send the money for the structure to a subsidiary of the life insurance company called the cession company. When a plaintiff receives a lump sum settlement, they may spend it too quickly, depriving them of the long-term financial security that future payments could provide. An assigned case is a qualified case, meaning that settlement proceeds qualify for tax benefits, and the defendant's payment obligation must align with the provisions of the Internal Revenue Code. However, instead of a one-time payment, some plaintiffs choose to have their compensation paid in a structured settlement.

Structured settlement payments are secured and irrevocable; however, annuity settlement options may differ from typical revenue contracts. If the settlement is structured to pay for a fixed guaranteed period, the annuity can normally be inherited for the rest of the guaranteed installments. The decision to use a structured settlement must be made before finalizing the settlement agreement. When people looking to sell their payments contact businesses, they collect information and calculate an offer for the specified payments.

A structured settlement is when part or all of the settlement amount is paid to the plaintiff over a period of years. We offer competitive rates and set the industry standard for excellent service to injured victims and structured settlement brokers.

Minnie Wuestenberg
Minnie Wuestenberg

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