The Settlement Alliance

Reader Beware: The Misinformation Surrounding Structured Settlements

Reader Beware: The Misinformation Surrounding Structured Settlements

Jun 2, 2017

If you anticipate receiving a personal injury settlement, you may have started researching how to handle the proceeds. Personal injury settlements can result in a larger lump sum than most people are accustomed to handling, so it’s important to have a plan for the money. Simply searching the web for financial strategies may result in misinformation that could impact your decision-making, especially when it comes to structured settlement annuities.

In this article from Huffington Post, the author states that,

A structured settlement is exactly the same as a lump sum, except the amount is paid out in installments, rather than all at once.”

Here’s the truth:

YES, structured settlements do pay out in a series of installments.

NO, a structured settlement is not “exactly the same as a lump sum.”

In reality, a structured settlement provides a range of benefits for a claimant that a lump sum does not:

  1. Income tax advantages: If a claimant accepts a personal injury settlement as a lump sum, the proceeds are tax-free. If the money is placed in a traditional investment, any earnings on the money are taxable. However, if the money is placed in a structured settlement annuity, both the payments and any interest growth on the annuity are 100% income tax-free.
  2. Guaranteed1 rate of return: The rate of return for a structured settlement annuity is fixed. That means that regardless of any market volatility, the claimant does not have to worry about losing money. Even if the market is down, the rate of return for the structured settlement remains constant.
  3. Flexible plan design: The claimant can decide to receive payments monthly, quarterly, bi-annually, annually, or in a few future lump sums. The payments can be equal over time, can increase or decrease over time, can include a large up-front payment and a series of smaller future payments, or can even be delayed to begin at a certain age. Bottom line, the payments can be designed to best meet the needs of the injured claimant.
  4. No management or administrative fees: Structured settlements do not have the overhead fees associated with traditional investments. When combined with the guaranteed rate of return, the lack of fees helps structured settlements present a safe, competitive alternative to traditional investments.
  5. Protection from dissipation: Settlement is an emotional time, and with that can come emotional financial decisions. “Friends” and “advisors” may come out of the woodwork, or claimants put money towards risky investments and large expenditures. A structured settlement helps preserve the settlement funds so that they can provide the claimant with a stable source of long-term income.

Don’t trust the web—trust the structured settlement experts

Before making a decision about how to handle your personal injury settlement, make sure you speak with one of our expert settlement planners. We can help you evaluate all of your settlement options—structured settlements included—so that you can make an informed decision. Contact us today at 800-464-2500 or

We are proud to partner with the highest rated structured settlement providers in the industry:

  • American general Life Companies
  • Berkshire Hathaway Structured Settlements
  • MetLife
  • Mutual of Omaha
  • New York Life
  • Pacific Life
  • Prudential