Legal Definitions - structured settlement

A structured settlement is an agreement between two parties to resolve a legal dispute or lawsuit. In this type of settlement, the defendant agrees to pay the plaintiff a specified amount of money periodically over a set period of time. This is different from a lump sum payment, which is paid all at once.

• In a personal injury case, the defendant may agree to pay the plaintiff a certain amount of money each month for a specified number of years instead of a lump sum payment.
• A terminally ill person may sell their life insurance policy to a third party in exchange for a lump sum payment. The third party then receives the insurance benefit when the person dies. This is called a viatical settlement.

These examples illustrate how structured settlements work. Instead of receiving a large sum of money all at once, the plaintiff or policyholder receives smaller payments over time. This can be beneficial for both parties, as it allows the defendant or third party to spread out the payments and can provide the plaintiff or policyholder with a steady stream of income.