In the course of your personal injury lawsuit you may be offered a structured settlement deal as a financial option. This could be offered to you at the end of the case when the court finds in your favor and orders an insurance company to pay you a certain amount of compensation. Or the company itself could offer it before your case gets to court or during the process.

Unlike a lump sum payment a structured settlement deal here makes the payments due to you over time. So, if you are awarded $100,000 then you could choose a schedule of payments to suit you. You could, for example, take $5,000 a month for 20 months, $50,000 a year for two years or $10,000 up front and then nine annual payments of $10,000.

There are many reasons why people opt for this kind of solution as it does come with a range of advantages compared to a single lump sum payment. For example:

#1. Money management — being given $100,000 may seem fantastic but few people have enough experience of money management to know what to do with the money. Investment may seem like an easy option but if you have no investment experience than this may not give you the returns you need.

And, suddenly having a lot of cash to hand can simply encourage us to spend and to give money away to our friends and family. The problem here is the fact that you could wake up after just a few weeks or months and find that all your money is gone. A series of structured settlement payments will be much easier to cope with.

#2. Tax advantages — legislation has made it tax advantageous to accept a structured settlement. If you accept a lump sum payment as an alternative then you probably won’t have to pay income tax on the capital sum itself. But, you might have to pay tax on any income that the capital sum earns.

This isn’t an issue with structured settlement payments which have been given a range of tax breaks to make them more attractive to consumers. So, you could save yourself a fair amount of money in tax payments by taking this kind of staggered payment route.

#3. Future planning — the injury that you suffered may well have a long term impact on your life as well as an immediate one. A well thought out structured settlement deal can help you compensate for future costs and needs arising from your injury. So, for example, your structured settlement broker can help you assess when you will potentially need money and what for.

For example, if you are now wheelchair bound as a result of your injury then they can help you build in payments to cover wheelchair replacement costs over time. This simply ensures that you’ll have enough money to cover your future as well as your present needs.

You may well decide that a lump sum single payment will suit you best but do take the time to investigate the advantages of taking a structured settlement instead. For many people this kind of deal offers them the kind of financial security that they need after a personal injury or accident.