by John Darer® CLU ChFC MSSC CeFT RSP CLTC
What is a Structured Settlement?
A structured settlement is a financial arrangement that resolves a personal injury or wrongful death claim through periodic payments instead of a lump sum. In addition, the payments follow a customized schedule agreed to by the parties. This approach helps claimants secure long‑term financial stability and reflects the intent of Congress when it enacted the Periodic Payment Settlement Tax Act of 1982.
Definition of Structured Settlement per IRC §5891(c)
The term “structured settlement” means an arrangement—
Read What you Need to Know About Structured Settlements
Why Clarity Matters
Some negotiations devolve into the tedious exercise of “going up and down the coconut tree,” where numbers move incrementally but no one gains meaningful clarity.
Most people’s number‑one fear is FORO — the fear of running out.
Structured settlements help address that concern by converting a portion of the recovery into predictable, needs‑based income over time.
What are Non‑Qualified Structured Settlements?
Structured settlements can also be used for taxable damages, or for tax exempt damages that are not specifically included in IRC §130 (e.g wrongful imprisonment, wrongful conviction which are exempt under IRC §139F).
What are Non Qualified Structured Settlements and Non Qualified Assignments for Tax Deferral
How are Structured Settlements Funded?
- Structured settlement payments are generally funded and backed by highly rated and regulated life insurance companies, a number of which have been in operation for more than 100 years. See. Structured Settlement Industry Boasts Six Annuity Issuers Older Than 120 Years! – Structured Settlements 4Real®Blog 2026 July 8, 2025
- Fixed and index-based options are avilable.
- Structured Settlements can also be funded with obligations of the United States Government (Treasury Funded Structured Settlements)
- Market Based Structured Settlements | How They Work
Structured settlements have received widespread bipartisan support from the U.S. Congress since the enactment of the Periodic Payment Settlement Tax Act of 1982.
Last updated March 25, 2026