When receiving an award for a personal injury case, the claimant is often puzzled by the choice of whether to take a lump sum settlement, or receive a structured settlement annuity. There are significant advantages to both. Receiving a lump sum provides a large amount of money in a single payment that can be used to pay down medical debts to allow the claimant to get back on their feet.However, a structured settlement annuity typically provides sizable monthly payments to pay for ongoing expenses like mortgage payments, car payments, utility expenses and daily living.
Lump Sum Settlement
There are significant benefits of receiving a lump sum settlement that includes no more late checks or missing a payment that got “lost” in the mail. Receiving a lump sum of cash allows the claimant to move on with their life, and not be bound by the restrictions of a structured settlement annuity. They can choose the doctors they want to go to, and never have to worry if they have enough money to make payments for their medical care. Additionally, receiving a lump sum of cash minimizes the potential of the annuity provider going out of business or any other reason the payment would cease.
A Structured Settlement Annuity
There are significant benefits to receiving a structured settlement annuity including the ability to receive a check every month. Many annuities can be designed to keep up with the rate of inflation to ensure that the claimant receives the same value payment in the future that they do now. Luckily, if the claimant makes the wrong decision there are remedies. If the decision was to take a lump sum payment in lieu of a structured settlement, the claimant can purchase their own annuity that generates a monthly paycheck. If the decision was to accept the structured settlement annuity, it can be sold to annuity brokers for cash.