The Pros And Cons Of Structured Settlements

Most people have heard of structure settlements, which refer to a stream of future payments that are either made on a periodic basis or in a lump sum. However, there are both pros and cons of structured settlements. If you want to learn more, then read the rest of this article.

1. The Pros– One of the best things about structures settlements is you can receive more money over a period of time. This is because interest and principal accrues as time goes on. They are tax-exempt, which is why a lot of people prefer structured annuities.

You may have the option to schedule payments to start immediately. You can also choose to have payments deferred into the future or to be paid out over a period of time, which may help you pay any future expenses or you can use it as supplement income.

However, you have to choose the terms carefully because once the terms are set, you probably won’t be able to change them.

Insurance companies pay out structured settlements. The payments are fixed, too. This means you can rest assure your payments will come on schedule. These kinds of payments give you peace of mind because they are dependable, regardless of the current state of the economy.

 

2. Cons– Structured settlements are not that flexible. When you agree to the terms, then there really is no flexibility. Not only that, but you could end up waiting months to get paid, and sometimes it can take years to get your money. If you want flexibility, then getting structured settlement may not be for you.

If you’re faced with an emergency and you need cash, then there’s bad news. You don’t be able to access the money to take care of those emergencies. In other words, you have to wait until the payment is due to you and you cannot request it earlier than that.

Another downside is not being able to get involved with investment opportunities that may arise, unless you have just received your money. It doesn’t matter if you are going to receive money in the future from your structured settlement.

As a result, you could miss out on investment opportunities, which is why some people are not fans of structured settlements.

One major con is the insurance company may go into liquidation, which may leave your payments in limbo. Generally speaking, it’s rare for an insurance company to do this because it’s usually the top companies that offer structured settlements.

However, it is possible for any insurance company to go into liquidation, so if you don’t like the idea of this happening, then think real hard about getting a structured settlement.

Those are some of the pros and cons of structured settlements. If you are not sure whether or not you should get one, then reread this article. Afterwards, you can make a decision. With that said, all you have to do now is decide if you should get a structured settlement or if you should avoid getting one.

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