Recently, I heard a story about a person who settled a case in 1981 with a structured settlement. The story was important because the insurance company that was to fund the annuity pursuant to the settlement recently declared bankruptcy and the injured plaintiff was advised that his/her benefits were being reduced going forward by approximately 50%.

Structured settlements have been used for years as a method of providing an income flow over time to an injured plaintiff. This accomplishes two important goals:

  • First, it assures that the injured party will not dissipate the fund with unwise investments.
  • Secondly, the income from the annuity based periodic payments is tax free.

The moral to this story is that if you are considering a structured settlement as part of a resolution to your personal injury case be sure that the insurance company that is funding the annuity is a highly rated company and, if possible, request that the insurance company with whom you are settling the case guarantees the payment of the settlement amount if something unforeseen should happen to the company issuing the annuity. Furthermore, it is always a good idea to enlist the services of a financial consultant to help guide you and your lawyer through the structured settlement process.

Edward Shensky is a member of Stark & Stark’s
Yardley, PA office, specializing in Accident & Personal Injury Law. For more information, please contact Mr. Shensky.