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FAQ for Claim Professionals
  1. Introduction
  2. What is a Structured Settlement?
  3. Why would a claimant want one?
  4. Why wouldn't they want one?
  5. How can the claimant manage the disadvantages?
  6. Why does my company want me to use them?
  7. Which kinds of cases are good candidates for structures?
  8. Which cases are not?
  9. What about case size?
  10. How do I get started?
  11. What's a typical negotiating scenario?
  12. What if the Claimant says no?
  13. Approved annuity issuers
  14. Why annuities?
  15. Annuity Pricing
  16. Reduced life expectancy discounts
  17. What is an "assignment"?
  18. Structure of the deal
  19. Insurance company ratings
  20. The closing process
  21. What do settlement brokers do?
  22. How are brokers paid?
  23. What if the claimant has their own broker?
Home Page > "How to" For Claims Professionals>ABC's

What Is A Structured Settlement?

A structured settlement, sometimes called a "structure", is an agreement in which an injured person agrees to accept a series of payments over time (as opposed to a single lump sum) from a defendant or insurer in return for a release of his or her claim. The name refers to the fact that payments are structured to meet specific needs.

The first payment is typically a check to cover attorney’s fees, liens, and expenses and to establish a cash reserve for the claimant. Future payments are backed by either U.S. Government bonds or annuity contracts from state-regulated life insurance companies*.

A typical structure might look like this:

$350,000 cash at settlement
$2,000 per month guaranteed for life,
not less than 30 years certain
$20,000 paid in year 5
$40,000 paid in year 10
$60,000 paid in year 15
$100,000 paid in year 20

*As required by tax law. See Internal Revenue Code Section 130