Structured Settlements – Pros and Cons of Structured Settlement Over a Lump Sum

An initial response for most people who are faced with a large sum of money is to take the money and run. When finalizing details of a structured settlements agreement stemming from an injury sustained by someone’s negligence, it would be in your best interest to stop running and consider your payout options.

One payout option is to receive the award amount in one lump sum and the other is in a form of a structured settlement in which you would receive scheduled payments in your lifetime. There are pros and cons with both options. By comparing both options, it can assist you in making the best decision that suits your personal needs.

Pros and Cons of a Structured Settlement

Pros – There are many advantages to selling, however, one would have to agree that security has to be one of the best aspects. Knowing that your payments would be received as scheduled brings a sense of peace and security. This is especially true, if you have been disabled as a result of your injury case.

Pro – Another benefit of choosing a structured settlement is that there is no tax charge at a state or federal level. There are no concerns about potential tax leaving you with more money for your investments.

Con – One of the negative aspects with a structured settlement is that with this type of agreement the only way to change your decision is to have a structured settlement company buy your payments. Many people stress with having to go through another process with their settlement. Plus it can come with a high price.

Pros and Cons of a Lump Sum Payment

Pro – Having a lump sum of money allows you to pay off acquired medical bills, attorney fees, and other expenses associated with being injured and possibly out of work.

Pro – Choosing a lump sum of payment will also provide you with a significant amount of money to put in investments. Making high yield investments that perform will is ideal for receiving a lump sum payment.

Con – The temptation of a lump sum of cash often falls into play for many people. The goal is to budget but a lot of people tend to overspend and prematurely run out of money.

It is your decision to balance out the pros and cons of both options. The key is to stop running and consider both options so that you can make the best decision for your future needs. The pro’s and con’s of selling structured settlements are as varied as the individual. When you’re ready or needing to sell a structured settlement, like anything else you must consider the bad and the good.



Source by Kat S

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