Many people opt for structured settlements instead of receiving a lump sum payment. Structured settlements are often drawn up and signed after a defendant is shown to be at fault and ordered by a court to pay compensation. There are cases, however, when people agree to terms of compensation outside of the courtroom. In these kinds of cases, there are generally only two ways to pay that compensation: in the form of a structured settlement, or in a lump sum. The payments will stretch out over a period of several years or throughout the life of the person receiving the payments.

There are several situations that are often paid to lottery winners, who receive a portion of their winnings spread out over time. This type of payment is often drawn up in the case of someone suffering from a chronic disease which occurred due to negligence. These people will not be able to finance their health care with a single payment, and so payments must be made to them throughout the course of their lives. This kind of situation is beneficial to many people, helping them to manage their finances in a realistic manner. It gives the payee a level of financial reassurance over a long period of time, whereas a lump sum might be spent in just a few months’ time.

One of the biggest reasons why people opt for this type of payment over lump sums is the financial security they provide. Such stability is difficult to come by in today’s economy, and anyone who has suffered a traumatic injury will want the added peace of mind that comes with a settlement. Indeed, those suffering from chronic problems will require more money over time, making a lump sum a very unappealing option. Others do not want the lump sum because they do not trust themselves not to spend the money in the wrong places. By receiving a settlement, people will be able to manage the money coming in in a much more responsible manner. Purchasing a settlement means that the payee receives a fixed amount over a set period of time, be it every quarter, half or full year.

Those who receive these payments may have opted to do so because they receive the money in a timelier manner than if they had selected the lump sum option. Because the money is coming from a defendant who many not have the entire sum on hand, a settlement is more likely to be paid on time without any difficulty from the defendant. These types of payments are arranged by insurance companies, leaving the payee to receive a reliable stream of money on a regular basis.

None of us are safe from the dangers of splurging especially if we have a lump sum coming into our names. By opting for the settlement, we are less likely to spend like fiends. Even those of us with medical bills on the rise may find it difficult to resist temptation. With this type of payment, there will be no temptation to resist just a set amount of money available to pay the bills.

Author Bio: Stewart Wrighter recently researched a landmarkstructured settlement case for an article. He learned that structured settlements are the best alternative in some cases.

Category: Finances
Keywords: structured settlement,structured settlements