In the most basic terms, a structured settlement is a payout arrangement that allows plaintiffs in personal injury suits to acquire damages in small amounts over a long period of time, as opposed to being awarded one big lump sum. The cash structured settlement can come from many different sources such as settlement of insurance, workman’s compensation, and other legal awards. The receiver of the payment is known as a payee or as an annuitant. A structured settlement allows you to collect in a regular manner for a stipulated time period. This time period is based on a court decision and cannot be changed without prior permission from the court. Structured settlement payments are sometimes called “periodic payments” and are easier on defendants who may not have a large amount of cash to pay out at one time. As per the terms and clauses of the agreement, the cash structured settlement can be made in monthly payments, quarterly, or even yearly or bi-yearly.

Structured settlements were first utilized in the United States and Canada during the 1970s and are now part of the statutory tort law of several common law countries. Although some uniformity exists, each of these countries has its own definitions, rules and standards for structured settlements.

It is wise to not only consult your personal injury attorney about whether or not to pursue a structured settlement, but also work with a financial planner and a trusted accountant. These experts can help you develop a sound money management plan based on your capacity to earn income (which may be diminished as a result of the accident for which you are suing for redress) and your expected future liabilities. There are advantages for structured settlement, depending on your personal situation, and include:

• In most cases you do not have to pay federal or state taxes on the payments that come to you at various intervals. The income which is accumulated from structured settlement plan is not considered gross income, thus not considered as taxable.
• If your structured settlement allows for a payment increase to cover future expenses and medical needs and adjusts accordingly, you could benefit in that matter.
• If you consider yourself a spendthrift, a structured settlement is a better investment plan for you because it can secure a fixed monthly income instead of providing a lump sum that can be spent quickly, leaving you with nothing for the future. This consideration may be particularly important to seniors or if you will have expenses for a child's education.
• Structured settlement plans do not interfere with social security benefits. This money cannot be compromised in divorce suits and cannot be considered as assets to pay debts. This adds security and confidence when planning ahead for your family's financial future.
• A structured insurance settlement plan generally does not involve lengthy court proceedings, thus can save you  attorney fees and court costs, as well as time, as opposed to long, drawn-out lawsuits that can be quite stressful.