The Types Of Structured Settlement Funding

Structured Settlement Funding is available in different forms. A structured settlement works as a compensation for a physical injury. It can be received as a lump sum or paid over a defined period of time. Structured Settlement money can be received in one of the following forms - period certain, lump sum, life, temporary, endowment, joint, installement refund, cash refund.

Here is the definition of structured settlement given by the Internal Revenue Code - "an arrangement-'(A) which is established by-'(i) suit or agreement for the periodic payment of damages excludable from the gross income of the recipient under section 104(a)(2), or '(ii) agreement for the periodic payment of compensation under any workers' compensation law excludable from the gross income of the recipient under section 104(a)(1), and '(B) under which the periodic payments are-'(i) of the character described in subparagraphs (A) and (B) of section 130 (c)(2), and '(ii) payable by a person who is a party to the suit or agreement or to the workers' compensation claim or by a person who has assumed the liability for such periodic payments under a qualified assignment in accordance with section 130."

Structured Settlement Funding in the form of period certain means that a specified amount will be received regularly for a period of time. The payment amount may be level or increasing regularly (usually annually) by a percentage (i.e., 3% compounded) or in fixed steps to help keep pace with inflation. Payment intervals can be weekly, monthly, quarterly, semiannually, annually, or longer.

The life form means that annuity payments will be made for as long as the annuitant lives or for the "Period Certain," whichever is longer. Payments may be level or increasing regularly. Lump sum is self-explanatory, as the injured person will receive a specific amount once. Installement refund means payments will be made for as long as the annuitant lives.

The temporary payments means that annuity payments are made for specific fixed period or for as long as the annuitant is alive, whichever is shorter. On the other hand, "endowment" stands for a lump sum payment which will be paid only if the measuring life (annuitant) is living on the date the payment is due.

Joint structured settlement funding represents annuity payments made for as long as at least one of the annuitants is living on the date the payment is scheduled to be made. This contract will terminate upon either the date of the last surviving annuitant's death or the date the last guaranteed payment is made, whichever is longer. Some companies offer a different percentage of the benefit (i.e., 50%, 200%, etc.) to be paid to the survivor after the first death.