https://www.insurerbrain.com/w/index.php?action=history&feed=atom&title=Definition%3AStructured_settlementDefinition:Structured settlement - Revision history2026-06-17T14:29:09ZRevision history for this page on the wikiMediaWiki 1.43.8https://www.insurerbrain.com/w/index.php?title=Definition:Structured_settlement&diff=8292&oldid=prevPlumBot: Bot: Creating new article from JSON2026-03-10T13:56:19Z<p>Bot: Creating new article from JSON</p>
<p><b>New page</b></p><div>⚖️ '''Structured settlement''' is an arrangement in which an [[Definition:Insurance carrier | insurance carrier]] resolves a [[Definition:Liability claim | liability claim]] — most commonly in [[Definition:Workers' compensation insurance | workers' compensation]], [[Definition:General liability insurance | general liability]], or [[Definition:Medical malpractice insurance | medical malpractice]] — by funding a stream of future periodic payments to the [[Definition:Claimant | claimant]] rather than making a single [[Definition:Lump-sum settlement | lump-sum payment]]. These future payments are typically guaranteed by the purchase of an [[Definition:Annuity | annuity]] from a [[Definition:Life insurance | life insurance company]], which assumes the obligation to make the scheduled disbursements over a defined period or the claimant's lifetime. The structure gained widespread use in the United States after Congress enacted favorable tax treatment in 1982, making the periodic payments — including the investment growth component — generally income-tax-free to the injured party.<br />
<br />
🔄 The mechanics begin during [[Definition:Claims settlement | settlement negotiations]], where the parties agree on the total value of the claim and then design a payment schedule tailored to the claimant's needs — for example, monthly income replacement, lump sums timed to cover future surgeries, or education fund disbursements for a minor. The [[Definition:Property and casualty insurance (P&C) | property and casualty insurer]] or its [[Definition:Claims adjuster | claims team]] works with a structured settlement consultant to determine the cost of the annuity that will produce the agreed-upon payment stream. Because the annuity typically costs less than the undiscounted total of all future payments, the insurer can close the claim for less than a comparable lump-sum payout while the claimant receives the same or greater total value over time, protected from the risk of dissipating a large one-time award.<br />
<br />
🏥 Beyond the financial engineering, structured settlements serve a genuinely protective function for seriously injured claimants who may lack the financial sophistication to manage a large award — studies have shown that lump-sum recipients frequently exhaust their funds within years. For insurers, the arrangement offers claim-closing certainty: once the annuity is purchased, the [[Definition:Reserve (insurance) | reserve]] is eliminated and the liability transfers to the life insurer, cleaning up the casualty carrier's balance sheet. Courts and [[Definition:Insurance regulator | regulators]] view structured settlements favorably for these reasons, and they remain a cornerstone of [[Definition:Claims management | claims management]] strategy in high-severity [[Definition:Casualty insurance | casualty]] lines. The market for structured settlement annuities involves specialized life carriers and brokers, forming a niche but enduring segment of the broader insurance ecosystem.<br />
<br />
'''Related concepts'''<br />
{{Div col|colwidth=20em}}<br />
* [[Definition:Annuity]]<br />
* [[Definition:Lump-sum settlement]]<br />
* [[Definition:Claims management]]<br />
* [[Definition:Workers' compensation insurance]]<br />
* [[Definition:Liability insurance]]<br />
* [[Definition:Claimant]]<br />
{{Div col end}}</div>PlumBot