Definition of Lump Sum Settlement
A lump sum settlement is a type of workers' compensation settlement that may be offered by an insurance company when an injured worker is left with some kind of permanent disability. Instead of continuing to provide monthly benefits and ongoing medical care, the insurance company offers a lump sum of money to settle the claim. In most instances, when an injured worker accepts a lump sum settlement, it ends any responsibility that the insurance company has in regard to that claim (in some states there is a type of lump sum settlement where you retain your right to future medical care). You are not allowed to reopen the case. You will not receive another penney from the insurance company, and you give up your right to any future medical care that you may need in the future.
There are pros and cons in accepting a lump sum settlement. For instance, the limited nature of workers' compensation benefits may leave you in a financial bind. A lump sum may help you to catch up and provide some security for your family. However, a lump sum settlement offer by the insurance company is usually very low, much lower than what you would receive by continuing to get monthly benefits. Also, you can never be sure that the lump sum amount will be sufficient for what the future may hold. It is a wise idea to consult with a workers compensation attorney before accepting a lump sum settlement.