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Structured Vs. Lump Sum Workers Compensation Settlements

One of the crossroads that you and your Missouri workers compensation attorney may come to in your case is choosing between these two types of settlements.

Though your workers’ compensation attorney will handle many of the tasks during your claim, there will be instances where you need to decide on how you’d like to proceed. One of those situations is choosing between a structured or lump sum settlement. Below, we explain the advantages and disadvantages of both, which will provide guidance on how you can make your decision wisely. Of course, you should also discuss the advantages and disadvantages of each option with your attorney.


A structured settlement is one in which you and your employer’s insurance company agree on a periodic payment that you will receive for a specific length of time. A few points you need to work out before making an official contract is the period, frequency, and sum of payments. Once you do, you should receive regular checks for the allotted time. The following are a few things you should consider when taking a structured settlement.

  • Because you receive your settlement in small increments, you won’t be tempted to spend it too fast. Instead, it will act more like an income, rather than a prize.
  • Though personal injury payouts are usually not taxed, the money you make off of investing it will be. This means that a lump sum will likely be taxed more than the structured option.
  • The structured model is generally used for large settlements, rather than small or medium-sized ones. A ballpark estimate of what constitutes the “large” designation is $150,000.
  • One danger you face with these types of settlements is the insurance company paying them going out of business. If they declare bankruptcy, there is a good chance that you will lose all of your benefits.

Lump Sum

Your second option is taking a lump sum settlement, which means you get all of the money up front. The primary advantage of using this method is that you get the cash right away. The following are a few things to know about this type of settlement.

  • Though your investments will be taxed, there is an inherent cost to not taking the money right away. The reason is twofold. First, inflation comprises the value of your money over time. Next, you miss out on the potential compound interest of investment.
  • Another investment option is making a large purchase, like a house. Doing so will allow you to get value out of your money right away and can double as a means of growing your wealth.
  • Lump sum agreements are most often used for small or medium-sized settlements, which are generally anything below $150,000.

One of the crossroads that you and your Missouri workers compensation attorney may come to in your case is choosing between these two types of settlements. It is best to carefully weigh your options with the help of an experienced attorney.

If you have been injured on the job in Missouri, give us a call 24/7 for a free consultation with an experienced workers compensation attorney. Call (816) 399-3706 for a FREE case evaluation.

Updated: June 14, 2019

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