When you are involved in a personal damage lawsuit your attorney should advise you to have a structured insurance broker in your case representing you interest.
The broker should be licensed and should be very experienced in determining your future financial needs in reference to your injury.
Trial Lawyer Joe Jamail explains why long term financial protection is important.
Is you decide to take a lump sum settlement your structured settlement attorney will determine the amount that will cover all of your future expensives as well as cover your loss of earnings from the injury. Once the injured claimant has received the lump sum amount they must now be in charge of handling their future investments or hire a investment manager an incur the managers fee. If you happen to be in a low tax bracket or if you have experience in handling large amounts of money then you may decide to choose a lump sum over a structured insurance settlement.
I will cover the disadvantages and advantages of receiving a lump sum settlement:
Lump Sum Disadvantages
• Your future investment will be taxed
• You must worry about the performance of the investment
• You may have to manage your investmen
• If may run out of funds before your death
• You may incur professional management fees
• Inflation may become a factor in your investment income
Advantages to a Lump Sum Amount
• This method can be much quicker and easier to finanlize
• The money can be diversified in various investments
• You have easy access to your entire amount if you need it
I wanted to mention another reason why a Structured Insurance Settlement is usually preferred over a one time Lump Sum amount are not usually a good option. If you take a lump sum then invest the money the interest or earnings gained from the lump sum are taxable.
Risk of inflation is also needs to be taken in consideration. Also consider the management fees that you will be charged by an investment broker. When receiving your money over time as an annuity then you can save money by not having to worry about the investment management fees.
