Structured settlements have become a natural part of personal injury and worker's compensation claims in the United States, as reported by the National Structured Settlements Trade Organization.

In 2001, life insurance members of NSSTA wrote over $6 billion of issued annuities as settlement for physical injury claims. This represents a 19 percent increase over 2000.

A structured settlement is the disbursement of money for a legal claim where all or part of the arrangement calls for future periodic payments. The money is paid in regular installments-annually, semi-annually as well as quarterly-either for a fixed period or for the duration of the claimant.

Depending on the requirements of the individual involved, the structure may also include some immediate payment to cover special damages. The payment is usually made through the purchase of an annuity from a Life Insurance Company.

A structured settlement structure can provide long-term economic security to injury victims and their loved ones through a stream of tax-free payments tailored to their requirements. Historically, they were first utilized in Canada and the United States during the 1970s as an alternative to get lump-sum payments for injured parties.

A structured settlement may also be utilized in situations involving winnings along with other substantial funds.

How a structured settlement works when a plaintiff settles a case for a large sum of money, the defendant, the plaintiff's attorney, or a financial planner may propose paying the settlement in installments gradually as opposed to in a single lump sum.

A structured settlement is actually a trade off. The people who were injured and/or their parents or guardians work with their lawyer and an outside broker to determine future medical and living needs.

This includes all upcoming operations, therapy, medical devices and other health care requirements. Then, an annuity is bought and held by an independent third party that makes payments to the individual who has been injured.

Unlike stock dividends or bank interest, these structured settlement payments are completely tax-free. What's more, the individual's annuity grows tax-free.

What happens if the installment arrangement no longer works for the person? When you need money for a large purchase or other expenses, consider selling your structured settlement.

Many companies can purchase all or part of your leftover periodic settlement payments for one single payment.

You may also think about restructuring your personal finances. And if you own your own company, get your business plans restructured with the help of a financial adviser. Make sure you get help from a financial expert that specializes within the field of restructuring a company.

This can increase your cash flow by providing funds you'll be able to use immediately to buy a home, pay college tuition, invest in a business or pay off debt.

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