Definition of Structured Settlement
A structured settlement is a settlement in which structured cash payments are made through an annuity system that is set up to compensate injury victims for their losses. Structured settlements are an alternative to a lump sum cash settlement and are established to provide payments over time. As it applies to workers' compensation, a structured settlement is a settlement in which payments are made in installments.
A structured settlement has several advantages for an injured employee. These include income tax free payments and flexible payment patterns designed to meet the needs of an injured worker. A structured settlement can also have some unique benefits to an injured worker in specific circumstances. These include providing the opportunity to receive cash for immediate financial needs and still keep a periodic payment plan for future needs, providing the opportunity to get lifetime payments instead of the statutory payments that stop in the event of remarriage, end of payment period or going back to work and no longer having to deal with the employer or the employer's insurance company as an employee gets fixed payments directly from the life insurance company.