Counter to what you might expect, not everyone that files a claim in an auto accident case decides to present their case in a courtroom. Some claimants prefer to resolve their dispute by means of a pre-trial settlement. When a claimant with the help of Personal Injury Lawyer in Owen Sound has elected to agree to a pre-trial settlement, he or she may opt for a structured settlement.
That option provides both parties with a chance to agree on both the size and the scheduled delivery of a series of monetary payments. Normally, the defendant promises to make monthly payments, but an alternate approach might be taken.
An alternative approach: annuity package
In this case, a company sells an annuity package to the defendant’s insurance company. The agency that sells such a package charges either a set fee or an annuity rate. The insurer buys the ability to use the company’s services. The seller, i.e. the annuity company promises to deliver the payments, as has been specified in the structured settlement.
Benefits linked to opting for a structured settlement:
The plaintiff avoids problems that could result from poor money management. Some plaintiffs overspend, when a monetary award comes in the form a lump sum. The delivery of funds gets carried out over time. Mostly, the plaintiff does not have much control over the funds, an annuity serves as a tax-free source of money.
In some cases, an annuity can be paired with a fixed or part lump sum payment. That fact highlights the way that an annuity payment can be tailored. In other words, it gets customized, in order to better satisfy the plaintiff’s needs.
Drawbacks to electing to go with a structured settlement:
• If the plaintiff retains too much control, the government can revoke the tax-free feature.
• If the insurance company becomes insolvent, the payments could get delayed.
• If payments continue for a long time, the plaintiff could become dependent on the delivery of each payment.
• The size of the monthly payment could decrease, depending on the prevailing economic conditions.
• If the insurance company pays an annuity company, the overall size of the payment could get diminished.
Some of the problems caused by the listed drawbacks can be solved, if the plaintiff takes the proper action. He or she should plan to work with a lawyer or with a financial adviser. By the same token, a new problem might arise. For instance, the plaintiff might move to a new judicial district. If the plaintiff’s willingness to consider the structured delivery of payments had anticipated a possible cash payout at some point in the future, the plaintiff’s move could put an end to that expectation. Structured settlements are not allowed in certain judicial districts.