Although structured settlements can have many advantages over lump sum settlements, they are not for everybody. A problem that some people have with structured settlements is that they may agree with the original settlement details but then change their mind later or have changed medical or living circumstances that necessitate a different distribution of money.
Unfortunately, once a structured settlement is decided upon, it cannot be changed. However, most people can avoid this kind of problem if they carefully evaluate their present and future needs with the help of legal and medical experts. By anticipating their evolving needs and significant future life events, claimants can ensure that enough money is always there when they need it. However, a structured settlement may not be suitable in some cases in which future medical needs cannot be clearly anticipated, such as the case of a disorder or injury with an uncertain course.
Another issue for some people is that they may end up with a larger net settlement if they invest the money themselves and allow funds to accrue over time. While this is certainly the case for financial experts who end up having to choose between a lump sum or structured settlement, most people will probably not make substantial investment income with a lump sum settlement for two reasons: first, many people overestimate their investment abilities, and second, it is difficult to avoid squandering money when you have a large lump sum available.
A fact that many claimants don't realize that can help them determine whether to take a structured settlement or to invest a lump sum themselves is that the money you will receive in your structured settlement is actually already being invested by financial experts. Your net settlement will therefore increase based on the investment skills and experience of a large body of experts. Your only loss comes from commissions and fees for the brokerage company and financial experts. For this reason, most people will not be able to do better by investing the money themselves, although each case is different.
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