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What Are the Pros and Cons of Structured Settlements?

You’ve been injured in a slip-and-fall accident, and now, your life will never be the same.

What Are the Pros and Cons of Structured Settlements?

You now struggle with pain on a regular, and your career has hit a ceiling as a result. Fortunately, you’ve received a financial settlement to cover your losses.

In this situation, you’re part of the 70% of people with personal injury claims who receive payouts, including settlements, rather than going to trial.

The caveat? Your settlement is arriving in the form of many payments rather than one lump sum.

The reality is, many sizeable settlement amounts end up being paid via structured settlements. With structured settlements, the paying parties usually buy annuities from insurance companies. Then, the injured parties receive payments over extended periods.

Structured settlements come with several advantages and disadvantages. Here’s a rundown of their pros and cons.

Let’s dig in!

Benefits of Structured Settlements

The chief benefit of a structured settlement is that you won’t receive all of the cash due to you at once.

This is a pro if you don’t have much financial knowledge or feel responsible enough to manage a large amount of cash effectively. Unfortunately, when people receive large sums of money, they tend to spend this money more quickly than they would smaller payments made over time.

Yet another reason to embrace a structured settlement is that the earnings are tax-free. Still, if you decide to invest your settlement payments and end up earning interest, then the interest you earn will be taxable.

Disadvantages of Structured Settlements

The biggest disadvantage of a structured settlement is that it doesn’t offer the liquidity that comes with getting a lump sum.

You won’t have a large sum of cash at your disposal to make a big purchase with — something you may find helpful depending on your unique situation.

Another structured settlement disadvantage is that the person paying your settlement may become insolvent at some point in the future. In this situation, you likely won’t get all of the money due to you in the end.

Structured settlements also don’t factor in inflation. Thus, the payment you’re receiving today may not be worth as much in the months or years ahead.

Do the disadvantages of structured settlements outweigh their benefits to you? If so, you do have the option of exchanging your structured settlement for a large sum of money by working with a company like Rightway Funding. This company specializes in helping people who require access to the money right away.

How We Can Help

In addition to highlighting the benefits and disadvantages of structured settlements, we provide startup business resources for people who are in the early stages of entrepreneurship.

For instance, through our site, you can find business plans and ideas, funding, and marketing help. You can also receive support in the areas of growing and scaling your new company.

Get in touch with us to learn more about how to create a profitable and growing business in the months and years ahead.

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