Structured Settlements
A structured settlement is a way to compensate the victim of an injury claim or the winner of a large insurance settlement through the use of periodic payments tailored to the victim's needs (as opposed to a single lump sum settlement). A structured settlement can be paid in regular installments either for a fixed period or for the lifetime of the claimant. Because it is tailor-made for individual cases, the structure may also include some immediate payment to cover special damages. The payment is usually made through purchase of an annuity from a Life Insurance Company. Structured settlement benefits are tax-free under IRC 104 (a)(2) code.
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