Structured settlements are a tool to resolve large workers’ compensation claims. When settling a claim the claimant might receive either a lump sum payment (one payment) or a “structured settlement†(payments made over time). Structured settlements are a type of annuity. They are a natural fit with workers’ compensation claims since claimants were already accustomed to receiving weekly payments. Settling a claim with a structured settlement instead of a lump sum payment allows claimants to continue receiving payments on a scheduled basis while also:
· giving them the option to designate a beneficiary,
· to receive benefits tax-free,
· plan for future family expenses such as college and
· allowing some the opportunity to receive more money on a coordinated basis once the structured settlement value was pro-rated over a lifetime.
Structured settlements are a benefit to employers too since the annuities are funded with “present value†rather than “ultimate valueâ€. Thus, employers are able to cap their exposures and close the file with less outlay than if they funded the entire amount up front. Employers with high retentions and self-insured employers have input into which structured settlement company they use. If you select a firm to work with, include that in your Special Handling Instructions.
We appreciate Richard Regna, CSSC, for providing this material. If you’d like additional information, you can post a comment or contact Richard directly at rregna@sfainc.com Structured Financial Associates, Inc. website: www.sfainc.com
