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Should I Accept a Structured Settlement from the Insurance Company for a Personal Injury Claim?


Insurance companies often offer a plaintiff in a personal injury case a number of different options to settle a claim prior to trial, such as a lump sum payment, a structured settlement, or a combination of the two.

The most common form of a settlement in personal injury cases are lump sum payments. A lump sum payment is a one-time payment issued by the insurance company in effort to settle a claim against their insured. A structured settlement is paid to the plaintiff over a period of time, generally coinciding with certain key ages of the plaintiff. An example of a structured settlement is as follows: a plaintiff will begin receiving $1,000 per month when he or she turns 40 years old. The plaintiff will continue to receive the monthly settlement check until the full amount of money guaranteed under the structured settlement is exhausted.

There are several advantages to accepting a structured settlement. First, accepting a structured settlement saves a plaintiff money on his or her taxes. With a structured settlement, a plaintiff has much less money sitting in the bank, and thus a much lower tax obligation. Furthermore, a structured settlement ensures that a plaintiff will not spend his or her money from the settlement too quickly. It is quite common for personal injury plaintiffs that receive a large lump sum to spend the money in an extremely short period of time, and have nothing left to use in the future. In turn, a structured settlement helps meet the the injured party's future financial needs, thereby promoting future financial security.

On the other hand, there are advantages to accepting a lump sum payment as well. The major advantage of accepting a lump sum payment is that the plaintiff received the money right away. If the plaintiff has outstanding debt, or is planning on investing the money into a home, schooling, or other opportunities, then it would be advantageous to accept a lump sum payment in exchange for settling their case.

In any event, the decision as to whether or not to accept a structured settlement from an insurance company in a personal injury claim requires several considerations. The skilled attorneys at Ball & McCann, LLP take a tremendous amount of pride in thoroughly explaining all of our their clients options thoroughly, and in a way that is easy to understand. If you or a loved one has any questions about a personal injury case or another legal matter, contact the law firm of Ball & McCann to get your questions answered today.

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