Although some Colorado accident cases go to trial in front of a judge and jury, many are resolved through a negotiated settlement. That is particularly true when dealing with insurance companies, whether it is your own insurer, a negligent driver’s auto insurance provider, or the company that handles your employer’s workers’ compensation benefits.
At Levine Law, our structured settlement attorneys have helped people and families across Colorado get compensation for their injuries through settlements. This is an efficient way to resolve many accident cases and avoid much of the time, cost, and stress that can come with an all-out court battle.
Settlements typically come in two different types: lump sum and structured. Although lump-sum settlements offer more money immediately, structured deals can help ensure some financial stability over a longer period of time in some cases. It is important to understand how each option works before agreeing to a settlement.
How Structured Settlements Work in Colorado
As the name suggests, structured settlements pay out a predetermined amount at regular intervals over a designated period of time. Although the insurance company usually pays the entire amount upfront, the person receiving the settlement money purchases an annuity and designates the amount and timing of payments from the total amount.
These settlements are an alternative to lump-sum payments, in which a person injured in a car crash, slip and fall, incident of medical malpractice or other accident receives the entire payment all at once. Structured settlements are designed to stretch the money over a longer period of time.
The annuity payments can be set up to cover a certain period of time or the recipient’s entire life. They can also be combined with lump-sum settlements so that a chunk of the money is paid out and the rest is put into an annuity.
The Pros and Cons of Structured Settlements
People and families opt for structured settlements for a number of different reasons. Our Denver settlement lawyers have found that some of the top benefits of structured settlements include:
- Security and predictability: You can plan your financial future with the confidence that comes with knowing that you will be receiving specific annuity payments at regular intervals.
- Lifetime guarantee: Many structured settlements are guaranteed for life, meaning the money can be used for medical and living expenses for as long as you live.
- Less risk: Payments in intervals reduce the risk that the recipient blows through the money quickly.
- Tax benefits: If you take a lump-sum payment and invest that money, gains are taxed. In a structured settlement annuity, however, the company managing the annuity invests the money and provides you a return. In other words, the annuity is a tax-free investment.
Structured settlements are not without their drawbacks. Some of the primary reasons that we see people opt for lump-sum payments instead include:
- No changes: If you take a structured settlement it is nearly impossible to get the terms changed if you wind up needing more money ahead of time.
- Uncertainty: Annuities typically do not account for inflation, economic downturns and other risks.
- Lack of control: The structured settlement route prevents you from taking the full amount right away and investing it as you see fit.
Structured Settlements in Colorado Workers’ Compensation Cases
Structured settlements are common in workers’ compensation cases, in which a person injured on the job gets medical care covered and is paid a portion of his or her missed wages.
An insurance company may agree to make a series of periodic workers’ compensation benefits payments or the injured worker may decide to put a lump sum payment into an annuity. The good news is that workers’ compensation payments are generally not taxed under either arrangement.
A structured settlement for future medical expenses can be particularly useful because it gives the injured worker the freedom to manage their own medical treatment. It also offers peace of mind to workers unable to return to their jobs by ensuring that money will continue to come in.
At Levine Law, our structured settlement lawyers can help you weigh your options and determine whether a structured settlement is right for you and your family.
Speak with a Denver Structured Settlement Lawyer Today
If you or a loved one has been injured in an accident in Denver, an attorney at Levine Law can evaluate your case and help you seek compensation from those responsible.
Our lawyers are pleased to serve clients throughout Colorado, including Denver, Colorado Springs, Fort Collins, and Loveland. Call 303-333-8000 or contact us online to speak with a structured settlement lawyer.
