What's the Difference Between Types of Settlements?

Posted by rightway Funding on June 24th, 2019

Receiving a settlement can be a big relief to those who obtain them. The primary reason for this is because settlements usually come on the heels of some negative situations, like untimely death, a lawsuit, an automobile accident or injury. For this reason, settlements are quite often a welcome relief to those who have endured a long and agonizing wait for resolution to a serious situation. The type of settlement that is received may wary, and often depends upon the unique circumstances surrounding each individual case. This article will help to clear up some of the confusion and will discuss the difference between several common types of settlement.

Annuities are typically viewed more as an investment rather than a settlement. An annuity payment is usually bought and then sent through an insurance company or even an investment firm. One example of an annuity would be lottery winnings, wherein annual payments are made until the annuity has been fully paid out. There are some organizations that will even pay individuals cash for annuity payments, allowing the annuity to have it's ownership transferred.

Structured settlements bear some similarities to annuity payments, in that they are also paid out annually until the commitment has been fulfilled. One key difference, however, is that structured settlements will typically be the result of a lawsuit or serious injury. Also, unlike annuities, you will usually have more control over the size of each structured payment rather than a fixed payment like you would find with a annuity.

Lump sum payments are different than structured or annuity payments because they typically involve a majority of the settlement being given out right away rather than over a span of time. In most cases, a small percentage of the settlement is left out of the final total as an act of contrition in order to receive a single large pyment rather than many small payments. 

Child support settlements are becoming increasingly more common as the divorce rate for Americans increases. These payments are usually the result of a settlement that has been mandated by a judge at the end of divorce proceedings. These payments are usually given out on a monthly basis until the child or children reach an age of independence. 

There are many different types of settlement that an individual can receive. Each type has its own stipulations and structure, whether it is the structured settlement that is paid out monthly, the lump sum that is given all at once, individuals paying cash for annuity payments, or the single dad receiving monthly child support, each settlement is different and requires some awareness in order to get the most out of them.