How do structured settlements work?

How do structured settlements work?

Structural settlements are the result of legal settlements that are ultimately pays by insurance companies. But there are four parties involves in structured settlement work.



The injured party. A claimant files a lawsuit against the party they claim has been injured.


The party against whom the claimant sues. If the defendant loses the case in court—or settles before it goes to court—they can set up a structured settlement to pay the settlement.

Assignment Company

The defendant—or their insurance company—enters into a qualified assignment to transfer their obligations to make periodic settlement payments to the claimant. The liability is transfers to an assignment company that accepts the liability.

Insurance company

Assignment companies usually work with life insurance companies. The assignment company purchases a structured settlement annuity from the life insurance company and issues payments to the claimant for the duration of the annual contract.

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