After meeting with an accident, it is stressful both physically and mentally for an individual. So many questions keep on pondering across one’s mind, like how to manage the huge lump of medical bills, how to manage the day-to-day expenses, and who is going to pay for all these charges? This could be overwhelming for an individual.
In such situations, an individual deserves to get the correct compensation. The compensation is negotiated, and after the offender and his lawyer or insurance company make an agreement, the amount will be transferred to you or your lawyer’s account. This is how the settlement would be paid out.
Primary Payment Structures
Lump-sum Payment
A lump-sum payment is a one-time payment method. You get the agreed-upon amount of compensation money from the offender’s insurance company upfront. The law firm conducts the negotiations and fixes the compensation based on the loss incurred.
Here are the advantages and disadvantages of a lump sum payment.
Advantages:
- The main advantage of getting a lump-sum payment is that you get quick access to the money with which you can pay off your medical bills and all other expenses right away.
- Another huge advantage is that in most cases, a lump-sum payment is tax-free. Unless you decide to make an investment with it.
Disadvantages:
- If you do not have a proper investment plan, getting a lump-sum payment would be a huge disadvantage.
- As humans, we have the tendency to spend a lot of money when we have a large sum of money. So, for someone who spends their money without proper management, this payment method would be a drawback.
Structured Settlement
On the other hand, a structured settlement is one where you get paid the agreed-upon amount of money over a longer period of time. A structured settlement will be applicable for all kinds of personal injuries, such as car accidents, wrongful death, medical malpractice, etc.
Advantages:
- A structured settlement would be helpful because it provides you with a stable and reliable source of income.
- It can also cover all your future medical expenses.
- It provides better financial security by providing a steady cash flow.
Disadvantages:
- In a structured settlement, you can’t change the payment schedule after you have decided to go with this.
- You can never have full access to the total amount. For instance, if you want to pay an unexpected medical bill, it would be very difficult.
- Additionally, a structured settlement may provide a lesser overall sum compared to a lump-sum payment with a wise investment.
Get in Touch With a Lawyer
It is always a good idea to have a lawyer by your side. They may provide you with better solutions for your problem. An experienced lawyer can even increase the chance of you getting a huge amount of compensation while negotiating for your personal injury. Negotiating for yourself would be a naïve move.
By doing so, you may not even get the proper compensation for the loss you have suffered. If you prefer moving forward with a lawyer, always remember that the compensation money will be paid to you only after deducting their legal fee, litigation costs, or any other medical expenses.
Key Takeaways
- There are two types of injury settlement methods. One is a lump-sum payment, and the other is a structured settlement.
- A lump-sum payment is a one-time payment method.
- Whereas, in a structured settlement, the compensation is paid over a period of time.
- Get professional advice on which method is the best fit for you.
- The compensation amount will be paid to you only after deducting all the charges by the lawyer.