You need structured settlement information because when you have knowledge you make informed decisions. Making a choice between receiving a lump sum award from a legal case or being paid via a structured settlement is not as easy as it seems. A hasty, unadvised decision made without knowing the right information can be costly for the future. But with structured settlement information you can make the decision that best fits your present and your future.

First Instinct, then Knowledge

A study conducted in 2007 indicated that the less structured settlement information a person has, the less likely it is that he or she will choose a structured settlement. And, more importantly, the opposite holds true: the more a person knows about structured settlements, the more likely he or she will select a structured settlement instead of a cash payment. What this means is, knowledge is power. When people understand the value of a settlement, and the future security that it offers, they are more likely to make the educated choice and opt for the structured settlement. It stands to reason that informed people will also be more likely to hold on to their structure unless it becomes absolutely necessary to sell.

It may surprise some to know that lump sum settlements are more common than structured settlements. Joseph M. Costello, Chairperson of the National Structured Settlements Trade Association (NSSTA) Marketing Committee, reported at NSSTA’s 2007 Winter Meeting and 2007 Annual Meeting that just 7% of personal injury settlements between $75,000 and $100,000 include structured settlements and only 30% of personal injury settlements above $1 million include structured settlements.

Education Matters

In the above study, people were asked how they would prefer to receive a settlement. With no structured settlement information, that is no explanation of the difference between a lump sum payment and a structured settlement annuity, 65% chose a lump sum and 35% chose a structured settlement. But after receiving explanations of the differences between a lump sum and a structured settlement, 73% chose the structured settlement annuity payments and only 27% chose the lump sum payout, a complete switch.

The survey concluded that “the structured settlement industry needs to educate Americans about structured settlements”.

Once they learned about the benefits of structured settlements, plaintiffs said that a primary reason that they would choose a structured settlement annuity is because it provides a reliable income for monthly expenses and guarantees financial independence. What may not be as clear to plaintiffs nowadays are the options and the flexibility that a structured settlement offers.

Understanding the Reasons

There are a number of reasons why people who do not fully understand settlements would opt for a full lump sum. Among these reasons are:

• They don’t like the idea that someone else controls their money. Everyone likes to feel in control. However, education can be a form of control; when people understand the value of a structured settlement, and they make the decision themselves, they feel better about it and are less likely to try and sell it later.
• They feel that their money is not safe. This is an even bigger problem given our recent economic crisis. People feel that if they can see all their money on a statement then they are safer. They need to be educated in the security that an annuity can provide.
• They believe their money has more value now than it will later. In a way they are right here, but they also need to understand that any payments they receive will likely add up to more than a lump sum of cash that they receive now.
• They do not realize that they can sell their payments later, if their life changes. Given the flexibility offered by the buying and selling on the secondary market, people need to be educated in the fact that structured settlement payments may be a good, flexible option.

It Takes Some Thought
Receiving a lump sum of money can be exciting and offer a feeling of security. But doing so with structured settlement information can also lead to hasty decisions about what to do with that money. Bad investments lurk everywhere and good investments take time to research. Opting for a structured settlement and knowing that there is an option to sell the payments can give the recipient time to consider his or her financial plan.