How to Properly Evaluate a Structured Settlement Offer


What exactly is a structured settlement offer? Essentially, if you have been the plaintiff in a worker's compensation, personal injury or other type of civil suit and won the case, then you may have received a structured settlement offer. The defendant in such cases, if they lose, basically will purchase an annuity contract from an insurance company.

Over the course of the life of the contract, you will receive a set amount to be paid to you on a regular basis. These payments will be regular and predictable. Having said this, is there more to know about structured settlement offers? Absolutely.

This brief article will guide you through certain facets of structured settlements that are absolutely imperative for you to know about and how to properly evaluate those features of a structured settlement offer.

How to Determine How Much Your Settlement Is Worth

This is usually very easy to determine, but it is important to keep in mind that money has a time value attached to it. Usually, what this means, is to say that as time goes on, the value of money changes, usually for the worse. For example, $1,000 in 2005 had a relatively higher commodity value than $1,000 does in the year 2015.

Now, think if you are to receive a structured settlement offer of $1,000 a month for ten years starting in the year 2015. By the time that 2025 rolls around, that $1,000 will be worth significantly less. So, although you will nominally stand to make $120,000, the real value of that money is affected by the time value of that money. It is highly recommended that you speak to a resident money expert or your accountant, so you can accurately judge the real value of your structured settlement offer.

Should You Sell Your Structured Settlement Offer?

This is difficult question to answer and is highly context-dependent. Selling your structured settlement offer, or receiving a "buyout" essentially means that you will receive a lump sump of cash in place of receiving the structured payment of the amount you are delegated to receive at whatever time you are delegated to receive it.

Having said this, the buy out will always be nominally less than the amount you are eventually entitled to receive. For example, if you had a structured settlement offer of $120,000 over the course of 10 years at $1,000 a month, you would most likely be offered a buy out with a 15% discount loaded in the buyer's favor. This means you would receive a little over $62,000. Now, that seems like a bit of a rip off, but, depending on how you wish to treat that money, it could work out in your favor.

For example, many people who wish to start a business and are receiving the benefits of a structured settlement offer will accept a buy out so they can use that money to go towards starting their own business, the logistics of the business and any overhead involved. This does not mean that accepting a buyout is the only option that you have. There are several other ways to go about starting a business without having to accept a buy out on your structured settlement offer.

It is often suggested that individuals take the monthly cash that they receive from a structured settlement offer and utilize that towards seeking out a loan. That way, they can still reap the benefits from the structured settlement, ultimately not lose any cash on the structured settlement offer, and then will simply have to worry about paying off a loan, the interest of which accrued will most likely be much less than the amount you would lose by accepting a buyout.

Evaluating a structured settlement offer is not as difficult as it seems. Just take a bit of time and effort and you'll find that the process is not as daunting as it first appears. For more information on your options, visit resources like


20 July 2015

Getting My Finances In Order

When I started thinking about my life, I realized that I was spending a lot more money than I should be every month on little extras. I wanted to streamline things, so I decided to start focusing on getting my finances in order. I started looking around my house, and I was pleased to discover that there were more than a few things I could sell for a little extra cash. I put them online, and I was amazed to see how quickly they sold. After selling some things, I was able to get my finances in order, which was a huge relief. This blog is all about getting your finances in order.