Structured Settlement Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Structured Settlement, written in plain English, along with examples of how it is used.

What is Structured Settlement?

“Compensation for damages that is not paid through a single lump sum, but is paid out over time through multiple payments. The structure is tailor-made for individual cases and may include an immediate payment to cover special damages. Typically, payment is made by purchasing an annuity from a life insurance company. Under IRC 104 (a)(2) code, structured settlement benefits are tax free. Cash may be received fro structured settlements by selling them to a broker who purchases annuities.