A structured settlement is a means by which, usually an insurance company, can make payments to an injured party over time.  The structured part comes into play when the payments are guaranteed for a certain amount of time with a certain payment each month.  Structured settlements are usually found in case of wrongful injury cases when a defendant or insurance company settles out of court.

Structured settlements are also a cheaper way for defendants or insurance companies to escape the liability of a large settlement amount.  Because they rely upon annuities, a one million dollar claim might only cost $400,000 to purchase up front.  This is beneficial for the insurance company or defendant because they don't have to pay the full amount.

Basically, you have quite a few.  Depending upon how the settlement is written, your income from the structured settlement could be tax free for life.  Also, you can build in lump sum payments over time if you so desire.  For example, if you know that every 5 years you will need an accessible vehicle for a wheelchair, you can structure the annuity to payout a lump sum large enough every 5 years that will cover this cost.

Some of the variances of structured settlements are to have a fixed term, usually 30 years or so, and also have a survivorship benefit.  If the recipient of the annuity should die before the 30 year guaranteed payout term, then the survivors of the party would continue to recieve the funds for the remaining time of the 30 years.

Since each state is different, if you are considering a structured settlement in a case, please take the time to find a good and qualified financial advisor that specializes in structured settlements.  They will be invaluable to you in order to help you make the right decisions for your future.

This is a good question.  There are several theories on the history of why structured settlements were created, however the most prevalent theory is this.

Structured settlements were created because of greed.  When people were awarded large sums of money in one payment up front that was supposed to take care of them for the rest of their lives, they often went crazy with the money and ended up with nothing.  Also, care givers that were in charge of the funds for someone that couldn't take care of themselves (invalid, brain injury, etc.) have been known to abuse the money that was meant for taking care of someone.

Structured settlements began in an effort to control the flow of money going to the person that was awarded the damages.  Also, it is a cheaper way for the person or insurance company to pay for those damages.  For example, if the jury awards $1 million to someone, the person or insurance company might only have to purchase a $400,000 annuity to cover the cost of the $1 million judgement.