If you have sued a company for any kind of harm done to you either intentionally or due to negligence, you are eligible for a settlement. This can be better understood with the help of an example. Let us say you are working for a company and while on duty, you are injured or you lose your arm. And if it is found that the accident has taken place as the machines were not maintained properly, you are eligible for a settlement, which will serve as a compensation for you. An individual is also eligible for settlement if he has an insurance claim to make. The proceeds of the insurance claim can also be paid in form of structured settlement.

You can either opt for a lump sum payment that your defendant owes you and the amount that has been finalized by lawyers representing you (as a claimant) and your defendant. Alternatively, you can also opt for structured settlement in which you receive payments as installments in a systematic manner that may be monthly in nature or as decided by your lawyer and you depending on the need.

Under such circumstances, the defendant who has to pay the money to you buys annuity of an equivalent dollar amount that he is required to pay upfront.

Structured settlements – The different types
You as a plaintiff will receive the installments in structured settlement. There are different types of the same. They are-

• Assigned method - In this method, a third party will buy the annuity for you. The third party is usually entrusted with the settlement obligation.
• Buy-and-Hold method - The defendant buys annuity from a life insurance carrier.

The structured settlement market has gained immense prominence over the years due to the fact that more and more people are willing to convert their future payments into current ones. As a result a secondary market has grown. Also there are many such companies that are operating in the settlement market, one of the well known ones being JG Wentworth.

Structured settlement installments – Your options
Once it has been decided upon that you will opt for installments and not lump sum, you have the option to receive payments in the following mode:

• Yearly payments – Equal amount of payment is distributed over a tenure of one year till the time you are eligible to receive the same
• Payments are made from time to time to cover expenses related to medical care and other housing expenses
• Monthly indexed payments – Payments that are influenced by a financial index over a period of time. The amount can change due to the index.
• Inflation hedging – Payments that change depending on the present economic condition like inflation or deflation in the economy.

However, it is important for you to decide which option suits your needs the best prior to signing the agreement.

Author’s Bio: Sherry is working as an investment banker. She takes active interest in trading of annuities very similar to the trading carried out by JG Wentworth. She is conducting extensive research on the same so that she can help her clients expand their portfolio. You can follow her on Twitter @SherryRRosen