If you have been injured at work and are considering accepting a workers’ compensation settlement, it is essential that you understand not just the short-term settlement but the long-term implications of it. We suggest working with a workers’ compensation attorney to ensure you know your options, but you can keep reading to learn the difference between the two main types of settlement: lump sum and lifetime benefits.
Understanding Lump Sum Settlements
A lump sum settlement is one large payment designed to cover all damages for the rest of your life. Once it is paid, you can do what you want with it, but you will not be able to sue for future damages if they arise.
The main advantage of a lump sum settlement is that you get the money right away. If you manage money well, then you could invest it wisely and know you will have it for future needs. Another advantage is that you can get whatever medical procedures you want, without the need to prove they are related to a work injury. The money is truly yours to spend as you see fit.
However, there are disadvantages. As mentioned above, if you suffer future complications caused by the injury, you will not have legal recourse. Second, in most cases, a lump sum will be less than ongoing payments. Finally, some insurance companies require that you quit your job to pay you. Why? Because they do not want you to return to the same job, have the same injury, and file another claim.
Understanding Structured Settlements
When a person is injured and accepts a structured settlement, they are paid gradually for the rest of their life. Additionally, the insurance company pays medical expenses related to the injury. This is an agreement made between the insurance company and the victim, and a specific amount is paid out yearly for a period of time.
There are a few options within this choice. For example, you can choose to have a specific time period to be paid, or you can defer payment. Some people choose deferment if their injury is likely to get much worse as time goes on, so that they can receive the money when they are no longer able to work. Also notable, these payments earn interest and they are not taxable. However, as is true of a lump sum, this option cannot be altered once it is set up.
Do you have questions about which option to choose in your case? Are you facing a tough legal decision related to an injury you have suffered? If so, contact The Law Offices of Larry H. Parker at 866-536-5788 for a free legal consultation right away.