When a personal injury matter settles, there are two primary ways the settlement can be paid out for an adult claimant: a lump sum cash payment, or a structured settlement.
A structured settlement is created when some or all of a personal injury settlement is deposited with a life insurance company in exchange for guaranteed tax-free payments for a specific number of years or for the recipient’s lifetime. While it is common to structure the payments on a monthly basis, the structure can also include periodic lump sums, which are also received tax-free.