How do structured settlements work? | How do organized settlements work?
Structural settlements are the result of legal settlements that are ultimately paid by insurance companies. But there are four groups involved in the work of structured settlement.
Parties involved in a structured settlement:
Claimant
The injured party. A claimant files a lawsuit against the party who claims to have been injured.
Defendant
The party against whom the claimant sues. If the defendant loses the case in court—or settles before it goes to court—they can set up a structured settlement to pay the settlement.
Assignment Company
The defendant—or their insurance company—enters into a qualified assignment to transfer their obligations to make periodic settlement payments to the plaintiff. The liability is transferred to an assignment company that accepts the liability.
Insurance company
Assignment companies usually work with life insurance companies. The assignment company purchases a structured settlement annuity from the life insurance company and issues payments to the claimant for the duration of the annuity contract.
