This guide to structured settlements will give you insight into an important realm of personal injury law, that is prevalant amongst individuals and businesses alike.

A structured settlement is a series of periodical payments that are paid out to a claimant, as a legal settlement that he or she will use to resolve a personal injury tort (an allegation of wrongdoing) claim. Note that Structured Settlement law differs from country to country.

Structured settlements are financial arrangemenst typically used when an individual is awarded a large sum of money. Several categories exist, as each are designed to suit the individual's settlement case and financial needs. Structured settlements provide benefits to injured claimants, defendants, insurers as well as attorneys. For claimants, structured settlement benefits can include (but are not limited to) guaranteed payments over a set threshold of time, the elimination of claimants' investment fees and tax-free annuities. Structured settlements, fixed annuities and settlement trusts benefit all parties in the long run. Various institutions advertise the ability to "cash out" structured settlements. Its appeal is marketed through the convenient lump sum that the claimant receives, which, from a taxation & accounting perspective, will actually result in losing money in the long run.

Structured settlements provide a predictable and steady income stream over a period of time, which may vary from several years to the claimant's lifetime. They are devised to benefit your financial security and interests. Before pursuing your settlement, you must consider whether lump sum of cash for a structured settlement would be in your best interests, as opposed to scheduled payments. Structured settlements often constitute monthly payments in small amounts. Structured settlement firms strive to purchase these contracts for pennies on the dollar, only to sell them for an immediate lump sum.

Structured settlements are usually funded by purchasing an annuity or annuities from an authoritate, highly rated life insurance company. This company actually makes the payments to the injured person. These structured settlement payments may be made for any acceptable length of time, which includes the individual's lifetime.

Company XYZ has done something negligent that has resulted in the injury of John. John then settled a tort suit with Company XYZ. The settlement stated that Company XYZ will agree to make John a series of payments over time, in exchange for John's dropping of the lawsuit. Company XYZ will then begin their obligation to pay John through their insurance company, who usually purchases an annuity (an investment contract that pays off after time), or assigns a third party to do so (an assignment company). This annuity is then used to pay off the periodic payments, as stated in the settlement.

• Annuity: A deferred investment contract that pays its owner (or annuitant) over time (which is specified in months or years). The payment - called an annuitization - for a certain period.

• Assignment Company: A third-party company that receives a cash sum from the insurance company, that is sufficient to purchase an annuity. This company is usually an affiliate of the insurance company.

• Claimant: Also known as "plaintiff," or the person making the claim/taking legal action.

• Qualified Assignment: A legal device in which the obligation of structured settlement payments is deferred to.

• Tort: A civil wrong; a wrongdoing that is susceptible to the taking of legal action. Torts usually fall within the realm of negligence, defamation and related actions.