Clients have three payment options when their claim or lawsuit is settled:
1) a lump sum cash settlement,
2) periodic payments through a structured settlement annuity or
3) a combination of cash and structured payments.

In years past, personal injury settlements always involved lump-sum payouts. While the payout was tax-free, the settlement proceeds were taxable unless invested in tax-free products. The Internal Revenue Service allows defendants in physical injury cases to purchase insurance annuities to fund structured settlements to the injured parties, with all proceeds from the annuities tax-free.

Using annuities, injured parties receive guaranteed tax-free income issued by an A or A+-rated life insurance company. Injured individuals can choose to receive 100 percent of the funds through a structured settlement annuity, or a combination of an annuity with a cash component for immediate or emergency needs.