(Newswire.net — March 1, 2021) — If you had a personal injury or workers compensation claim, you’ll eventually get a settlement offer from the insurance company.
You may get offered a lump sum, or you’ll have structured settlement payments. A recent study in Washington State showed that people take these settlement payments just to end the frustration with dealing with the system.
You don’t want to take a bad offer that can affect you for years. Read on to find out more about settlement payments and how you can make the right choice for yourself and your family.
What Are Structured Settlements?
A structured settlement is a way to break up your settlement into smaller payments. For example, if your settlement is for $300,000, that can be dispersed over 10 years. So your payments would be $30,000 a year for 10 years.
A lump sum is just one payment of the entire amount.
Lump Sum or Structured Settlement?
You may have the option to choose between a lump sum payment and a structured settlement. How can you tell which one is right for you?
It depends on your situation. If you’ve been waiting for a long time for your settlement, you may have a lot of medical bills to pay. In that case, a lump sum payment can be the better option.
You do need to understand the tax differences between a structured settlement and lump sum. You’ll want to talk to an accountant or tax attorney to see which one is a better option.
Types of Structured Settlements
There are different types of settlement payments that you can negotiate with the insurance company.
For example, you can get a large first payment to take care of your bills and then have the remaining settlement funds get disbursed over several years.
You can also set up the settlement payments to start low and increase over time and vice versa.
There are some cases where people decide to receive payments once they reach retirement age. That can give you additional security in retirement, but you have to make sure the insurance company is going to stay around.
What If You Make the Wrong Choice?
The hardest thing about deciding between a structured settlement and a lump sum is that you don’t know what will happen in the future.
You could take a structured settlement and forget that the attorney gets a percentage of the payments and you end up with less than you expected.
If you find yourself in a position where you have settlement payments and can’t meet your obligations, you can sell your structured settlement for cash.
Choosing the Right Settlement Payments
When you receive an insurance settlement offer, you may have structured settlement payments. You could choose to take a lump sum.
You’ll want to weigh the tax implications, attorney fees, and the mountain of bills that you have. It helps to get guidance from an attorney and accountant before making a decision.
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