1. Terms of the settlement are decided.
Once determined that compensation is owed to the plaintiff, the exact terms must be decided upon. The way that a structured settlement works does not change but the lawsuit payout options can vary widely. Current and future needs will be considered by the plaintiff. For example, there could be a larger initial payment and smaller payments afterward. It could be paid out over several years, or for the rest of the person’s life. Once the parties agree to the terms, the defendant will give the money to the qualified assignee to purchase the annuity.
2. Annuity is purchased from an insurance company. Annuity is set sup by the qualified assignee to match the terms which were agreed upon. Once these terms for how the payments will be distributed are set, they cannot be changed, regardless of how the plaintiff’s needs may change in the future. These payments are set up with the best intentions of the plaintiff in mind. However, over time, the plaintiff’s needs and financial situation may change, leading him or her to seek out a lump sum payment.
3. Plaintiff begins receiving payments from the settlement. The plaintiff will receive the payments from the insurance company, at the designated time, as specified in the contract.