What is a Structured Settlement? A Guide for Personal Injury Victims in Alabama

Sometimes, life throws you a curveball. You could suffer an accident at any moment. A car crash. A slip on an unmarked wet floor. Something you couldn’t prevent could leave you with pain, medical bills, and a mountain of uncertainty.

When the dust settles, you’re left wondering, “How am I going to pay for all of this?” You hear terms thrown around by insurance companies and your personal injury lawyer. Compensation. Settlements. Structured payments. You want to make the right choices, but it all feels overwhelming when you’re just trying to heal and move on.

If you’ve been injured in Alabama because of someone else’s carelessness, you may have heard about structured settlements. What are they? How do they work? And more importantly, are they the right option for you? Having the answers can make all the difference at a time like this.

How do structured settlements work?

Here’s how the process usually unfolds:

Step 1: Negotiation

Once your personal injury lawyer and the insurance company reach a settlement, the next step is figuring out how the payout will be structured. An experienced lawyer will work with you to determine whether a lump sum or a structured settlement makes the most sense for your situation.

Step 2: Customization

The great thing about structured settlements is that they can be tailored to fit your life. If you need a steady stream of monthly payments to cover bills or maybe annual payments for larger expenses like college tuition or rehab costs, these settlements can be designed to meet those needs.

Step 3: Annuity funding

Once the terms are set, the payments are made through an annuity. This ensures that you’ll receive the agreed-upon funds directly from the insurer, just as planned.

For example, say your total settlement is $500,000. Rather than handing you the full amount, the payment schedule might break it into $40,000 per year for 12.5 years. Reliable, predictable, and tailored to you.

Advantages of structured settlements

Structured settlements offer a variety of benefits, making them a smart choice for many people after a personal injury case.

Long-term financial security

After a personal injury, your life doesn’t just go back to normal. The bills keep piling up – doctor’s visits, treatment, caregiving, and the loss of income. A structured settlement can give you that peace of mind by making sure you get consistent payments over time. It’s one less thing you have to worry about.

Tax-free benefits

Here’s a win: payments from structured settlements in personal injury cases are often tax-free. That means what you get is what you keep, without the government taking a chunk of it. Under state and federal law, you can rest easy knowing your compensation isn’t going to get eaten up by taxes.

Tailored to your needs

One of the best things about structured settlements is how customizable they are. Maybe you need more money upfront to cover a big surgery or rehab costs. Or maybe smaller, regular payments work better for your day-to-day expenses. Whatever your situation, your settlement can be set up to work for you, not the other way around.

Protects you from rash decisions

It’s not easy to manage a lump sum if you’ve never had that much money before. A structured settlement helps you avoid the risk of blowing through it all too quickly, offering you a steady stream of funds instead.

Disadvantages of structured settlements

As good as they sound, structured settlements aren’t perfect. It’s important to understand the downsides, too.

Limited flexibility

Here’s the thing: A structured settlement isn’t like a savings account where you can dip into it whenever you want. Once the payment plan is locked in, it’s tough to change it. If an emergency comes up or you need cash fast, it can be frustrating when you realize that flexibility just isn’t there.

Inflation risk

We all know inflation is a real issue, right? Over time, money just doesn’t go as far as it used to. Unless your settlement includes something to adjust for inflation, the amount you’re getting could lose its value. That means, in a few years, you might not be able to buy as much with your payments as you can today.

Dependence on the annuity provider

The whole thing relies on annuities from insurance companies. Most of these companies are solid, but there’s always some risk. What if the provider faces financial troubles down the line? It’s a possibility, and it’s something you should think about before signing anything. It’s why you want to go with a provider you can trust.

The main takeaway? Structured settlements have strengths and weaknesses. The answer to whether it works for you depends completely on your unique circumstances.

Is a structured settlement right for you?

Consider these questions when thinking about structured settlements:

• Do you need ongoing income for treatment, living expenses, or caregiving?
• Can you responsibly manage a large lump sum, or might that feel overwhelming?
• Will your long-term financial needs (like kid’s tuition or retirement) benefit from steady payments over a lifetime?

Structured settlements are a flexible tool, but they’re not ideal for everyone. The best way to decide? Talk it through with someone who knows the ins and outs.

Why you need a personal injury lawyer

A structured settlement isn’t just about agreeing to payment terms. It’s about making sure those terms protect you. Insurance companies don’t look out for your interests.

This is why having an experienced personal injury attorney matters so much.

A skilled attorney can:

• Negotiate terms tailored to your future needs.
• Spot potential pitfalls in settlement offers.
• Handle insurance adjusters who try to push fast, lowball payouts.

Without someone in your corner, you could end up with a settlement structured to benefit the other party and not you.

Common questions about structured settlements

“Can I sell my structured settlement for a lump sum?”

Yes, but it’s not always a great idea. Selling future payments usually means you get less than the original value due to fees and discounts. It’s worth discussing with a lawyer first.

“What happens if I pass away before all payments are made?”

Most structured settlements allow you to name a beneficiary. This person would continue receiving payments in your place, ensuring the money isn’t lost.

“Can I still choose a lump sum instead?”

Absolutely. Some personal injury victims prefer a lump sum, especially if they have immediate financial needs.

Final thoughts: Don’t navigate this alone

Dealing with a personal injury changes your life in ways you can’t always see coming. But your financial recovery doesn’t have to feel like walking a tightrope. A structured settlement could bring the stability and peace of mind you deserve.

Still, this isn’t a decision to make alone. If you’ve been injured in Alabama, a knowledgeable personal injury lawyer can help you understand your options and fight for what works best for your future.

Call Martin & Helms now or fill out the contact form for a free consultation. You don’t have to face this uphill battle alone — we’re here to help.