What Is a Structured Settlement?
A structured settlement is an amount of money paid periodically. It usually comes from successful settlement after a lawsuit.
When a large amount of money is won structured settlement companies will come in to advise on a plan that will mean the money is paid over time instead of one lump sum.
If you want to buy settlement plans then it can mean that you won't be paid the full amount you received in compensation as the rest goes to settlement company. Bear this is mind when buying a settlement plan and make sure you are properly advised.
Having the money come in on a monthly basis can provide you with regular, guaranteed income for the rest of your life depending on the settlement amount and your age. This is often preferable to a lump sum as it means you don't have to budget and deal with large numbers.
A settlement plan in this situation is very similar to a retirement annuity. When you retire you have the option of buying an annuity with the money you built up in your pension fund. This money will then be used to pay you a regular sum of money until you die.
The only difference here is that you will be using compensation to buy the annuity rather than your pension fund. Depending on the amount of money you are awarded, you will receive regular payments until it runs out or until you die. This is another thing to discuss with the settlement company.
Some annuities can keep paying out to a dependant after you die. This is a good way to provide for your children in the future but it's good to make sure this is what your settlement policy is going to do. You'll need to work out what is best for you at your current age with the money you are being offered.
If you know you need £800 per month for all the basics of life you'd be better off going for a policy that pays out £1000 per month until you die rather than a policy that pays £500 per month and keeps paying to dependant when you're no longer around.
You need to work out how to get the most for your settlement and be comfortable.
If you want to shop around for the annuity that is best for you then you should visit a structured settlement broker as these will be able to advise you on the best policy for your circumstances. You also have the option of structuring as much of the money as you want and taking the rest as a lump sum. This is a good option if you have debts to pay off but also want a steady income.