Comparing Lump-Sum Settlements and Structured Settlements
After suffering a serious injury because of another person's negligence or wrongdoing, it is common to receive financial compensation for your medical expenses and suffering.
But many people are not aware that there are multiple ways to receive your compensation, each one with advantages and disadvantages.
By understanding the differences between lump-sum settlements and structured settlements, it is possible to make an informed decision.
Let's pretend you have received a $1,000,000 settlement after being permanently disabled in an automobile accident caused by another person.
Many people in such a situation are unsure what to do about such a large amount of money.
It is often possible to receive it all at once, in what is called a lump-sum settlement.
More recently, however, experts and advocacy organizations have encouraged people to take structured settlements, consisting of a series of payments over time.
There are many advantages to receiving a structured settlement.
Lump-sum payments are often subject to stricter tax regulations than structured payments.
It is also very common for people who receive large sums of money to manage it irresponsibly, in some cases ending up in worse financial shape than before the accident occurred.
Simply put, most people lack the discipline and experience to responsibly handle receiving $1,000,000 all at once.
Organizations including the American Association of People with Disabilities recommend against lump-sum payments.
Structured settlements offer victims a steady source of income, allowing them to live comfortably without running the risk of irresponsibly spending all of the settlement money.
In the case of disabled people in particular, a steady source of income can guarantee a much more secure livelihood.
Although there is no way to guarantee that a person will spend structured settlement payments wisely, the temptation to spend hundreds of thousands of dollars all at once is more than many people can handle.
By receiving their money in a steady stream, rather than a gush, victims can receive the financial compensation they deserve without the problems of a lump-sum.
But many people are not aware that there are multiple ways to receive your compensation, each one with advantages and disadvantages.
By understanding the differences between lump-sum settlements and structured settlements, it is possible to make an informed decision.
Let's pretend you have received a $1,000,000 settlement after being permanently disabled in an automobile accident caused by another person.
Many people in such a situation are unsure what to do about such a large amount of money.
It is often possible to receive it all at once, in what is called a lump-sum settlement.
More recently, however, experts and advocacy organizations have encouraged people to take structured settlements, consisting of a series of payments over time.
There are many advantages to receiving a structured settlement.
Lump-sum payments are often subject to stricter tax regulations than structured payments.
It is also very common for people who receive large sums of money to manage it irresponsibly, in some cases ending up in worse financial shape than before the accident occurred.
Simply put, most people lack the discipline and experience to responsibly handle receiving $1,000,000 all at once.
Organizations including the American Association of People with Disabilities recommend against lump-sum payments.
Structured settlements offer victims a steady source of income, allowing them to live comfortably without running the risk of irresponsibly spending all of the settlement money.
In the case of disabled people in particular, a steady source of income can guarantee a much more secure livelihood.
Although there is no way to guarantee that a person will spend structured settlement payments wisely, the temptation to spend hundreds of thousands of dollars all at once is more than many people can handle.
By receiving their money in a steady stream, rather than a gush, victims can receive the financial compensation they deserve without the problems of a lump-sum.
