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What are Structured Settlements?

For over 35 years, the federal government has encouraged injury victims and their dependents to use structured settlements by means of favorable tax rules for injury victims. Structured settlements have also attracted strong support from plaintiff attorneys, state attorneys general, legislators, judges, and disability advocates.

What is a structured settlement?

Structured settlements are an innovative and proven method of compensating injured plaintiffs in legal settlements. Encouraged by the U.S. Congress since 1982, a structured settlement is a voluntary agreement between the injured plaintiff and the defendant.

A structured settlement is a stream of periodic payments paid to an injured party by the defendant primarily through the purchase of an annuity (fixed and determinable) issued directly by highly rated life insurance companies. Other funding options include the purchase of United States Treasuries or more rarely, the defendant has the option to self-fund the periodic payments. Structured settlements provide plaintiffs in physical injury and wrongful death lawsuits security and guaranteed long-term tax-free payments. U.S Congress enacted the Periodic Payment Settlement Act of 1982 (Public Law 97-473), which formally recognized and encouraged the use of structured settlements in tort physical injury cases.

  • Structured Settlements funded by annuities and all structured settlement brokers are regulated by the state insurance commissions. Additionally, structured settlement consultants and the companies that provide them comply with at least seven Sections of the U.S. Tax Code that pertain to structured settlements (Section 104(a)(1), 104(a)(2) and 130. 451, 461(h), 83 and 5891), as well as several doctrines not codified such as cash equivalency and economic benefit.
  • Structured Settlement consultants provide services to defendants and their counsel, plaintiff attorneys and the injured parties and their families throughout the entire settlement process. The consultant's objective is to determine the needs of the injured victims and, if appropriate, the proper amount of their settlement to place into a structured settlement.
  • The National Structured Settlements Trade Association® (NSSTA®) has been working with legislators since the 1990’s to help establish State Structured Protection Acts (SSPAs) to protect recipients of structured settlement payments.

If you would like additional information about structured settlements, please contact a structured settlement consultant, a life insurance company in your area, or contact the National Structured Settlements Trade Association® at (202) 289-4004 or