If you sustain an injury in a motor vehicle accident, the New York courts may award you compensation for the damages that result. Those include pain and suffering, lost wages, loss of earning capacity, mental anguish and others. Even if your case does not go to trial, you, your attorney, the other party and the other party’s attorney will negotiate compensation as either a lump sum or structured settlement.
Both options come with their pros and cons. However, many people prefer structured settlements over lump payments, as structured payments make it easier to budget the award. Before you make any final decisions, however, it is important that you understand the ins and outs of this type of agreement so you can determine if it will work for your future financial goals.
An overview of structured settlements
According to Annuity.org, structured settlements are best for individuals who fear they may mismanage a large sum of cash and who value long-term financial security. If you decide to go the structured settlement route, you and your attorney can negotiate the terms of the agreement so that you can enjoy maximum benefits and the flexibility to achieve your financial goals. Terms you can negotiate are as follows:
- Start and end dates
- Frequency of payments
- Amounts of distribution
- Death benefits
Start and end dates
It is particularly important that you negotiate start and end dates, as these determine when you will start receiving payments and for how long. You can decide to start receiving benefits right away (ideal if you do not have any savings and are unable to work), or you can allow your settlement to accumulate. The longer you allow it to accumulate, the greater it will be.
As for end dates, you and the other party may decide on a life-only annuity or a period-certain annuity. With a life-only annuity, you will receive payments over the course of your lifetime. If you elect for a period-certain annuity, you will only receive payment for the length of time specified in the contract. It is important to note that a life-period settlement does not necessarily pay out more money. You may receive smaller payments over the course of your lifetime as opposed to larger payments over the course of say, 10 years.