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Things you need to know about structured settlements involving personal injuries
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Life is full of surprises. And one thing is for sure: it is not always a pleasant surprise that will come your way. Accidents and personal injuries are probable to happen due to other’s negligence.
After such horrible incidents, the only thing for you to do is file a lawsuit to claim for compensation to be given in lump sum. But that was years ago.
With the emergence of a procedure called structured settlement, getting compensation claims for your personal injuries would be a lot different.
Here are some questions regarding structured settlements for personal injuries.
What is structured settlement?
In structured settlement, instead of getting your compensation claims in a lump sum, you will be getting a fixed amount in a fixed period of time at a fixed time interval. All these details will be arrived at after the two parties agreed at certain conditions favorable to both of them.
How is the payment made?
The payment is done in the form of annuity (a contract that gives legal rights to the offended party to receive money as compensation) that is purchased by the responsible party from an insurance company.
What are the factors in determining structure settlement amounts?
The court considers the following factors to determine the amount to be given to the injured party:
Age and health conditions
The injured person could have been more productive because of his vigor and healthy conditions. This is taken into account while determining the settlement amount.
Wage Loss
The amount that you will receive must compensate for the amount of money that you will be earning if the accident did not happen. Degree of education, kind of job, and future opportunities are looked upon in this aspect.
Degree of Injury
The greater the damage inflicted upon a person, the higher the amount for settlement that must be given.
The amount must cover medical expenses needed to treat the injuries.
Motive
Greater amount of money is given to those parties that are genuinely in need of help, as compared to the amount that a person who will sue out of financial motives alone will receive.
What are the advantages of getting a structured settlement?
Here are some of the advantages that structured settlement can give you:
- Taxes can be minimized or eliminated.
Tax liabilities are lessened or eliminated for persons who are victims of accidents and are not capable of working normally to earn money. That is one way to ease the burden of the injured person.
- Compensation money can be managed with ease.
A steady flow of income will be given to the injured person from the insurance company. There is no need to hire a personal assistant to handle a large sum of money for you. Since money will come to at affixed interval, the receiver will be able to budget the money wisely to cover for the expenses. There are fewer chances to overspend and waste precious money.
What are the disadvantages of getting compensation payment through structured settlement?
Structured Settlement does have setbacks too.
- Money is not available for victims who need a large sum of money.
There are some victims who would want to purchase a house or a vehicle for their convenience. However, the money they receive monthly just cannot cover these expenses.
- The money would have bigger value when they have received it in lump sum.
The amount that the victim will receive is adjusted vis-à-vis inflation rate. That is why when the amount of money received over the settlement period is summed, the value is less than the actual value of money that should have been received in lump sum.
These are just some information regarding structured settlement that can help you when some untoward incidents happen. It is better to be prepared to make that decision once that time comes.
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