Structured Settlement Pros and Cons

Structured settlements offer significant benefits but also come with limitations. Understanding the full picture of structured settlement pros and cons helps you make an informed decision.

Pros of Structured Settlements

Tax-free income from physical injury cases, guaranteed payments regardless of market conditions, protection from impulsive spending, creditor protection in many states, and flexibility in payment design including immediate, deferred, increasing, or milestone lump sums.

Cons of Structured Settlements

Inflexibility once established, lower total return compared to aggressive investing, inability to access large sums without selling at a discount, limited control over your own money, and inflation erosion of fixed payments over time.

When Selling Makes Sense

Selling may be appropriate when you have high-interest debt costing more than the discount rate, need a home down payment, have a strong investment opportunity, or face a medical emergency.