The Types of Structured Settlements-An Overview

structured settlement

The court usually awarded a structured settlement as part of a legal settlement to compensate you for financial losses. Although the word settlement implies two parties, this isn’t always the case. You can receive payments from an insurance company, that is not considered the defendant in the case.

Structured settlements get paid out over several years or many decades, depending on how they’re structured and what they’re used for. This guide will cover the most common structured settlement types so you can make an informed decision about which option works best.

Lump-Sum Settlement

This is probably your first thought when you think about a structured settlement. With a lump sum settlement, you get your money all at once. As soon as you accept an offer from an insurer, you will receive it in exchange for dropping your lawsuit. They are sometimes called non-structured payments since they don’t come with any structure; you get a lump sum, and that’s it.

Annuity Settlement

It is when you make periodic payments to a claimant in exchange for future claims on future payments. You can buy separately or as part of a lump-sum buyout.

There are two different types of annuities: Single and Many Life Expectancies (MLS). The difference between these two comes down to how long they will factor your life expectancy into an offer made by a potential investor/buyer.

Installment Payment

When you choose to receive a lump sum payout, you decide to take those funds—as a single up-front payment or in smaller installments over time. One form for installment payments is Installment Payment Agreements (IPAs).

Insurance Contract Funds

Insurance contracts compensate you for a future loss. Some examples of these include disability insurance, life insurance, and annuities. When you buy any policy that provides compensation in a future event, such as death or injury, you make payments in one lump sum called a settlement.

Wrongful death settlements

In a wrongful death claim, you can recover damages to compensate another for emotional distress and loss. A wrongful death lawsuit is based on negligence in performing required duties.

When someone dies because you didn’t follow the rules and procedures, the family of that person may be able to file a wrongful death suit.

Workers’ compensation settlements

These settlements provide funds to you to cover your medical costs and lost wages. They aren’t classed as structured settlements, but they represent lump sum payments.

It is a type of investment where payments are in the hands of an independent third party.

Wrongful imprisonment settlements

In case of wrongful imprisonment, you should receive a settlement from any law enforcement agencies involved.

This could include local police departments, federal agencies such as Immigration and Customs Enforcement, or even state institutions like prisons.

Discrimination settlements

If fired, not hired, or refused a promotion because of your race, gender, sexual orientation, or other protected status, you may be eligible for a discrimination settlement.

The monetary value depends on how much their case is worth. For example, if you missed out on a $20,000 salary because of discrimination based on age, that money is usually received in a settlement.

Vaccine injury settlements

These settlements are usually paid out to people injured by vaccines. Vaccines are usually meant to protect us from disease, but some side effects occur. A payout for a vaccine injury may help you recover lost wages and medical expenses and compensate you for pain and suffering.


Although each situation is unique, there are several types of structured settlements. Generally speaking, these settlements fit into three categories:

  • Periodic payments for a set period
  • Scheduled lump-sum payments in a single amount at some point in time
  • Installment payments over time

Each one comes with its tax implications, but it can also help individuals make intelligent financial decisions. When it comes to structured settlements, there are many choices available depending on an individual’s needs.