In the United States a growing number of litigation cases in excess of one million dollars have resulted in an entire industries substantial growth. These cases are often the result of wrongful death or personal injury, and result in the plaintiff receiving large amounts of money as compensation for their loss. Oftentimes, the plaintiff finds themselves injured to the extent that a lifetime of income is lost to them. Rather than facing the burden of being able to pay for their families, the courts have begun to award structured settlement annuities to the injured.
In a structured settlement, the courts attempt to establish a means to provide for the injured party. The solution that tends be quite win-win for the parties involved is the use of fixed annuities for the settlement amount. Testing has shown most people that come into large amounts of money, either through the lottery or through settlements, tend to lose the money quite quickly. Whether it is the lack of knowledge of how to manage the funds or simply frivolity, the money often doesn’t last as long as the need for it exists.
The structured settlement annuity is designed to provide periodic monthly payments that can last the duration of the covered individual’s lifetime. This lifetime provision allows the courts to ensure that the plaintiff is not able to outlive their income needs, satisfying both the concerns of the judge and the needs of the injured. The injured party is also able to receive the payments without the hassle of determining the correct way to manage, maintain, and grow the funds. Because the annuity is not controlled by the plaintiff, it is also able to make distributions to the recipient income-tax free. This fact alone makes the settlement a very worthwhile method for the courts to use.