Best Way to Get Lottery Money: Structured Settlement vs. Lump Sum

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Structured Settlement vs. Lump Sum

If you have recently been awarded a payment due to a personal injury tort claim or a settlement, you might be wondering how you should get your money. There are really two things that you could do. You could either get a structured settlement, also called an annuity, or get a lump sum. Do you want it all at once or spread out for months or years? How do you know what the right choice is for you?

The first thing you have to do is get a better understanding of what these payment plans are. A lump sum is pretty much what its name suggests. It is a single payment made at one, specific time. An annuity, on the other hand, is where you get periodic payments on a schedule that you have agreed upon with the defendant. In other words, the main difference is that with a lump sum you get all of your money right away, and with a structured settlement you get your money over a period of time.

Now that you know what they are, are you ready to choose which one is right for you? Chances are you need a bit more information before you can pick which payment plan to go with. You can get more information by looking at the pros and cons of each. This will help you to really understand how each payment plan can benefit you in your specific situation. After you understand the pros and cons, you have to start making considerations about your situation. It may help to talk to a financial expert about your choices.


Structured Settlement


There are no two personal injury claims or settlements that are the same. That is why it is important for each claimant to do the research for themselves in order to figure out which path is right. First, you can look at the pros.

What are the benefits of getting a structured settlement?

  • When you get a structured settlement, you often end up getting more money than you would with a lump sum.
  • You cannot spend all of your winnings because you do not get all of the money at once.
  • There are tax advantages when you get a structured settlement. In some cases you may get the money tax-free.
  • A structured settlement can help you keep money that you have earmarked for future medical needs, college expenses or something else in the future.
  • These types of settlements require that a financial professional be involved, which can help you use your money wisely.
  • A structured settlement can also be a way of negotiating to ensure that a settlement is reached.

This type of payment plan would be extremely beneficial for an individual who lacks financial discipline. It will help the plaintiff have an income potentially for the rest of their life.

Lump Sum


What are the benefits of getting a lump sum?

  • Getting a lump sum means that you get all of your money right away, which means that you can invest it how you want to.
  • If you make enough money through investments, you may be able to leave money to heirs.
  • Because you get a lot of money all at once, you can use that money to pay off large debts.
  • You can use part of the lump sum to fund an annuity, which will give you the monthly payments you would get with a structured settlement.
  • You do not have to wait to get all of your money, which ensures that you will get the money within your lifetime.
  • This plan allows more flexibility, so if anything in your life changes you will be able to handle it.

This type of payment plan would be beneficial for someone with financial chops. It would allow them to grow their money and end up with even more than they were awarded.

Each payment plan has its own benefits. All you have to do is decide which benefits are more important to you. That will give you a great starting point to figure out what payment plan best suits your needs.


As you do your research, you will also come across lots of cons for each payment plan. You need to learn about this side as much as you do the positive side. It can help you eliminate one payment plan or another.

What are the negatives of getting a structured settlement?

  • Part of the reason you get a tax break on a structured settlement is because you do not really have control over the money. That means that if you have too much control, the IRS may decide that you should not get a tax break.
  • The payments can be affected by the economy in ways that make the payments smaller or even stop.
  • You might be unable to get the whole story from insurance agencies about what it will cost to protect the annuity.
  • After the initial setup, you have no control over the money until you get your monthly payments. That means that if an emergency comes up, you may have a hard time getting your money.
  • You will not be able to leave money to heirs.
  • This type of payment plan may not provide enough money to cover big, unexpected expenses.

A structured settlement can leave people feeling dependent and without control over their own assets. It can cause people to lose their financial security.


What are the negatives of getting a lump sum?

  • Getting a lump sum means that you get all of the money right away. That can give you the opportunity to spend it all rather quickly.
  • You could outlive the funds and become dependent on government resources.
  • You have the responsibility to invest and manage the money, so if you are not financially savvy it could end poorly.
  • You rarely get tax breaks when you get a lump sum, which means you will owe a lot in taxes.
  • If you do not plan appropriately, you may not have enough money for future medical bills, college expense or other costs that you know are coming.
  • You may not have a steady income coming in, which can make money tight.

After a lump sum has been spent, people may become dependent on government resources. People who do not have the financial ingenuity required may find themselves in dire straits.

The payment plans come with their own set of pros and cons. You have to consider a lot when you make the choice between structured settlements and lump sums. The choice may not be easy, but it is yours to make. Make sure that you look at every angle in order to ensure that you do what is best for you.

And Finally…

You know what the pros and cons are, but now you have to figure out how that all affects you and your unique situation. When you are trying to decide between structured settlements and lump sums you have to consider everything. You should think about your health. Are you going to have medical expenses? Will you live long enough to get all of your structured payments? You should really think about your investment and financial skills. Do you have what it takes to take care of a lump sum and not squander it?

You have to consider what your living expenses are and will be. Will you be getting other incomes from social security or pensions? Do you have a lot of savings you can rely on if your payments are not enough for a month? Will you be able to afford the taxes? These questions and so many others have to be answered before you can really make an informed decision about these different payment plans.

Because there is so much to think about when you have to pick between a structured settlement and a lump sum, you should be sure to talk to a financial professional. They will be able to go over the pros and cons in greater depth. They will be able to help you make all of the considerations that you need to. A financial professional will be able to help you look at your situation and the choices you have before you, and then make the best choice that you can. A financial expert may even be able to help you invest your lump sum, or plan your payment schedule for an annuity.

When you have to decide between a structured settlement and a lump sum, you have to think about all of the pros and cons. You then have to relate those pros and cons to your own position in order to figure out what the best route is for you. Do not forget to turn to a financial professional in order to better understand all of your choices. After you have consider everything, you have to choose the path that is most beneficial for you. Remember, your situation is unlike any one else’s, so you should do what you need to do not what others think you should do.


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