Lump Sum Settlement - The Positives and the Negatives

By Stefano Grossi
Consider yourself a plaintiff who has just won a compensation case. Now you are asked to choose the type of compensation you wish to receive i.e. a one time cash settlement or a structured settlement. The decision you make at this point of time must include a well thought over choice. In order to receive the right type of settlement, you need to analyze your over all situation and then decide which settlement will help you the most.

In most cases, a cash settlement is preferred, but it may not always be the right choice depending on your specific financial situation or future needs. In a case where you receive settlement for a case of injury where you had to be hospitalized, going for a lump sum settlement would seem better as you may wish to pay the mounting hospital bills without any burden. You may also take up any project that you had previously been holding back due to lack of sufficient funds. For example, getting a new house and setting it up the way you like, going on a vacation around the globe, etc. Cash settlements usually change your whole way of living, which might be a real pleasurable experience.

Lump sum settlements provide you with the total cash under your control. You may use it to invest in your business or take up a new career etc. The point is, cash sum settlements, you are once and for all done with the defendant in the case and are totally free to make decisions as to where the money goes and how it circulates. This specific point will lead us to analyze the disadvantages of cash settlements due to the basic human tendency of making wrong decisions.

In case of lump sum settlements, you will be handed the total amount. Now it is your decision on the how to handle this sum of cash that will invariably decide the destiny of this amount. The general human behavior is to spend according to the income. Hence, you may start spending lavishly on account of the lump sum balance in your bank. If not planned properly, this amount that once seemed an inexhaustible sum will be merely enough to buy you, or if you are a nice person, just your date a movie ticket.

Another disadvantage of a lump sum settlement is that it tends to be much smaller then the structured payout. Usually people find that the lump sum settlement idoes not provide the relief for the pain and suffering. . A series of structured settlements will create ongoing compensation even for the individuals lifetime that a lump sum amount does not provide. Hence one is required to consider all these factors while prompting for the type of settlement.

These are the very basic advantages and disadvantages of a lump sum settlement. To know the deeper and more technical aspects of lump sum settlements, talk to an expert in this field at FairField Funding. Fairfield Funding is a direct buyer of structured settlement annuities, will help get you cash for settlement.