A structured settlement recipient can receive payments at any reasonable regular interval, such as monthly, quarterly, annually or even some combination of schedules.
Initial Lump Sum
In many structured settlements, the periodic payments are supplemented by a larger lump-sum payment that comes immediately after the settlement is finalized. This is often necessary to cover attorney’s fees and any medical bills that have accumulated during negotiations.
Periodic Lump Sums
Extra payments that occur in the form of periodic lump sums may be included in the terms of a structured settlement contract. For example, a structured settlement holder on a monthly payment schedule may receive an additional payment every five years to pay for the cost of replacing and upgrading medical device
Final Lump Sum
A structured settlement can include a large lump-sum payment upon termination of the contract. A child recipient may receive regular payments while they are a minor and then one large lump sum to pay for their college tuition when they graduate from high school.
A great strength of a structured settlement is its ability to earn interest, allowing the payments to be adjusted over time to keep up with inflation. Payments can also be set to rise based on a schedule. This may be necessary if the costs of the recipient’s health care are expected to increase over time.
If health care costs are expected to decrease over time, payments can be structured to start high and then decrease. For example, if a minor receives a structured settlement in a wrongful death lawsuit, the payments may be structured to decrease when the child reaches the age of majority.
The current cash value of an annuity, as calculated using a specific discount rate.