A structured settlement is better than a lump settlement: Here are eight reasons why
Imagine you were injured in a motor vehicle accident, and after dragging the case in court for months, the judge finally rules in your favor; how would you want your settlement to be paid?
In full (as a lump settlement) or in parts (as a structured settlement)?
If my guess is right, I’m sure you’re going to say in full.
But guess what?
That may not be the best thing for you.
As much as every nerve in your body is pushing you to push for a full payment, you should do your best to resist the urge. Trust me; you’ll be glad you did.
Keep reading to find out about the benefits of structured settlements.
It helps prevent you from overspending
The biggest benefit of a structured settlement is that it helps prevent you from blowing your money.
Nobody is saying you’re a wreck and rotting for you to squander your money. But it’s just basic human nature. It’s easier to spend the money you have at hand than the money you’re expecting.
You can easily customize the payment amount, payment frequency, and every other detail associated with how you get paid.
If you want to get a large amount in the first few months because your bills are higher then, you can ask for large sums, then reduce it into smaller payments as time goes by. Or you could do it the other way round. It’s your choice.
Even better is the fact that you can sell future payments for instant cash if you ever have a financial emergency. This way, you’ll be getting a cash advance for pending future payments.
Note: When you’re ready to sell your structured settlements, consult the experts at Settle4Cash for guidance.
Instead of blowing all your settlement in one go and returning to a state where you’re too broke to lead certain expenses, a structured settlement gives you financial security for a long time to come.
Serves as an alternative stream of income
I know it’s only going to last a while, but wouldn’t you like the idea of getting a new credit alert every month?
That thought alone is absolutely refreshing.
Irrespective of how much you currently earn at your present work, the thought of creating another income stream should definitely spark something in you.
It helps you maintain your current standard and cost of living
It doesn’t matter how frugal or disciplined you are; if you have access to a large sum of money than you’re used to, your standard of living will most likely change.
For example, if you were trekking to work before, you will be tempted to start taking buses. If you always eat at home before, you will be tempted to try restaurants.
By and large, you’ll be tempted to live beyond your previous means.
This can be dangerous because the money is not going to keep coming. Once you exhaust the balance in the bank, you’re done. At which point, it may be hard going back to your former standard of living.
Your money is generally safer in a structured settlement
We all know the money market is unpredictable.
Right now, the price of the dollar could be spiraling downwards. And a moment later, it could be on the rise.
But that’s a problem reserved for people with cash at hand, cash in bank, or cash in the investment.
For you with “cash in anticipation,” you’re not affected at all.
If you opt for a structured settlement, your money will not decrease in a crashing market or increase in a flourishing one.
Your money is safe from prying eyes
Everybody has a debt or two they’re servicing.
If you don’t, then you’re one of the lucky few.
For those of us who do, the last thing we want is for our creditors to be able to access our financial reserve.
Luckily for us, money kept in structured settlements are concealed from prying eyes. Meaning, no one will know you have it.
Lump sum payments are taxed heavily, while structured payments are taxed minimally. In fact, in some states, there are no taxes over structured settlements.
By and large, putting your settlement money into a structured settlement can also save you from paying a large tax on the funds.
You might get an interest
Interestingly, some structured settlements accrue interest over time. Meaning that you could get more than your principal settlements at the end of the day.
Who wouldn’t like the possibility of that?
Story by Uday Tank