What is a Cash Structured Settlement?

What is a Cash Structured Settlement?

What is exactly is a cash structured settlement? Basically a cash structured settlement occurs when there is an insurance company that provides scheduled payments to a person as a result of a claim settlement. In other words, a structured settlement is a monetary package that allows for payment of a settlement to occur through scheduled installment payments for a period of time.

Structured settlements were first introduced in early in the seventies in Canada, then spreading rapidly into the United States. Several years later, this method found its way to Australia as well as Europe.

One benefit of structured settlements is that provides a tax free recurring payment over a period of time. These payments can very well be spread out through the live of the recipient. If death happens to occur to the recipient, a guaranteed portion of the settlement can be paid to a beneficiary.

An alternative to structured settlements is a lump sum payment. This basically means that a one time amount will be paid to the recipient instead of breaking the amount down into multiple payments over a designated period of time. This often occurs when a person wins the lottery. Some reasons that lump sum payments are of interest to individuals is that they may have a large expense they wish to pay off. For example, a home loan or mortgage, medical expenses, credit card debt, etc. With a lump sum payment, many debt issues can be resolved as a result of the large payment.

Although lump sum payments may seem appealing to some, structured settlements provide a continuous recurring income over a designated period of time.