by John Darer® CLU ChFC MSSC CeFT RSP CLTC
What is a Structured Settlement?
A structured settlement is a negotiated financial or insurance arrangement through which a claimant or plaintiff agrees to resolve a personal injury tort or wrongful death claim by receiving all or part of a settlement in the form of periodic payments on a agreed customized schedule, rather than as a lump sum.
Definition of Structured Settlement under IRC §5891(C)(1)
Non Qualified Structured Settlements
Structured settlements can also be used for taxable damages, or for tax exempt damages that are not specifically included in IRC §130 (e.g wrongful imprisonment, wrongful conviction which are exempt under IRC §139F).
How Are Structured Settlements Funded?
Structured settlement payments are generally funded and backed by highly rated and regulated life insurance companies, a number of which have been in operation for more than 100 years. Structured Settlements can also be funded with obligations of the United States Government (Treasury Funded Structured Settlements)
Structured settlements have received widespread bipartisan support from the U.S. Congress since the enactment of the Periodic Payment Settlement Act of 1982.