Structured settlements became popular in 1982 when the U.S. Congress passed The Periodic Payment Settlement Act of 1982 (Public Law 97-473). The act enables injury victims to obtain customized structured cash payment plans through insurance annuities that assure them guaranteed, tax-free income over time.

Previously, most settlements were paid out in lump sum cash payments. Injured parties, usually unaccustomed to receiving large sums of money, occasionally went through their settlement proceeds and were soon left with nothing.