Accident victims are entitled to compensation for losses resulting from accidents for which another party is responsible. This amount is usually settled as a lump sum, paid at once to the plaintiff. An alternative to this form of payment is the structured settlement which is paid periodically over a specified period.
That said, is it better to opt for lump sum or structured payments? Keep reading for a detailed walkthrough on lump sum and structured settlements for traumatic brain injuries.
Understanding the Differences Between Lump Sum and Structured Settlement
“If you or a loved one suffers a traumatic brain injury, you may opt to recover your losses through a personal injury lawsuit,” says attorney John Yannone of Price Benowitz Accident Injury Lawyers, LLP. “Speaking with legal counsel could help you understand the different possibilities for compensation.”
You could also file a catastrophic injury lawsuit to help recover non-financial losses such as pain and suffering and decreased quality of life.
As mentioned, the settlement could be a lump sum, where the plaintiff receives a large cash payout at once. For a structured settlement, a victim gets periodic payments of specific amounts over a specified period. Since the payment is made over time, it gains interest.
For example, a victim who was to receive $300,000 from a personal injury case might receive more than that amount as the settlements are a combination of principal and interest. The total amount of interest is determined by the length of time.
Structured plans are customizable and may include a portion of lump sum payment followed by periodic payments. Moreover, the periodic payments could last a lifetime, depending on age and payment amount.
However, even though receiving the payout at once may be more appealing, it may be wise to settle for a structured payment, especially for traumatic brain injuries. Here is why.
Traumatic Brain Injuries (TBIs) And Structured Settlements Explained
Catastrophic injuries result in life-changing and often long-term damage to the victims. If these injuries affect the brain, they may be more severe, leading to vision loss, slowed information processing, and trouble walking.
Statistics from the CDC show that more than two million people are diagnosed with TBIs yearly. Over half of these victims lose cognitive functions and employment within five years. Moreover, a third are incapacitated and cannot perform typical daily tasks without help.
Traumatic brain injuries affect muscle coordination making most patients immobile. Additionally, they suffer speech and hearing loss if the damage is severe. Such injuries cause permanent health complications and may require medical attention for extended periods.
Most TBI patients require long-term rehabilitation and physical therapy. Their families might need to remodel their homes for wheelchairs and walkers.
A structured settlement is the best alternative for TBI victims due to their long-term complications. A lump sum payment in such a case might not be the best alternative as one risks spending too much money upfront, leaving them helpless for subsequent costs over time. On the other hand, structured settlement guarantees even distribution of funds over a patient’s lifetime.
Note that structured settlements are not taxed and are customizable by the plaintiff. This means a plaintiff can decide how and when they want the payments done. These payments are also secure from market fluctuations.
Parting Shot
Determining the best settlement plan could be challenging as injuries vary from one person to another. Therefore, it is advisable to consult with a qualified lawyer to help you determine the right settlement plan.
