Structured settlement, by definition means an agreement or an arrangement by a claimant to accept a periodical payment for an injury claim. In simple terms it means that upon winning a judgment in a claim case the winner of the claim accepts his/her compensation in installation from the defendant party rather than in a lump sum.
Structured settlements first came into being in the 1970s in the United States and Canada and is now a part of statutory law of several common law countries that include Australia and England too. Structured settlement is also called as ‘periodic payment’, and the trial ruling passed in a claim case referred to as ‘ periodic payment judgment’.
The overall payment system in such a case can be organized in a variety of ways that take care of the needs of the person receiving the claim and also protect him/her from fluctuating financial trends. The terms of agreement regarding the periodic payment may include a simple yearly payment or more complex arrangements like an initial lump sum amount followed by monthly installments or deferred payment options. There are also provisions that take care in case of death of the insured.
The most obvious advantages of structured settlement include having a source of income and an ease in management of taxes. Structured settlement can be a useful feature depending on the needs of the claimant.