|
|
|
Structured Settlements
A structured settlement is a way of settling a claim for personal injury compensation. These claims will be common law negligence claims for motor vehicle accidents, sporting accidents, public liability, product liability or medical indemnity. Structured settlements are not possible for workers’ compensation type claims.
Only the injured person or their legal personal representative can enter into a structured settlement. It is not possible to have a structured settlement where the person has died.
Structured settlements are the result of an agreement between the parties to the personal injury case. The parties will generally be the injured person or their legal personal representative, the defendant and their insurer. Instead of the injured person receiving a single lump sum payment of compensation from the defendant or the defendant’s insurer, they receive all or part of their compensation in the form of tax-exempt periodic payments (annuities). It is not possible to enter into a structured settlement after a court has awarded damages.
An injured person can only enter into a structured settlement if the lump sum compensation payment, that would have been awarded if a court decided their case, would have been a tax-free capital payment.
The components of a structured settlement?
There can be several components to a structured settlement.
A structured settlement must involve the purchase by the defendant or their insurer of one or more personal injury annuities that provide the injured person with a minimum monthly level of support equal to the age pension and pension supplement. This component is compulsory for all structured settlements.
A structured settlement will usually include an immediate cash component being paid to the injured person. This immediate lump sum can be used by the injured person to pay costs, pay debts or purchase equipment. This component is optional but most people will need some cash immediately after the settlement of their case.
A structured settlement that includes a personal injury annuity providing the minimum monthly level of support may also include
other personal injury annuities (which have more flexible conditions than the compulsory minimum annuity), and/or
personal injury lump sums, which can provide tax-free future lump sums at pre-agreed future dates.
This component is optional.
Selling Structured Settlements or Individually Owned Annuities
Many companies wil purchase structured settlements and individually owned annuities. Structures settlements can be purchased in their entirety or a portion of a future payment stream to meet a customer's emergency financial needs for:
medical expenses
debt elimination
education costs
new business opportunities
new home or automobile purchases.
Many companies advise its customers to sell only that portion of a payment stream necessary to satisfy a current need. And, develop each payment transaction around the customer’s specific financial needs by offering a variety of purchase options:
Lump sum payoff
Partial lump sum payout
Restructured payment stream
Many purchases of structured settlemets use underwriting criteria among the strictest in the industry, ensures the quickest possible transaction with the highest return for its customers.
|
|
|
