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 With the sheer number of complex financial instruments in the world today, it can be difficult to understand them all. Many people receive structured settlement payments from an insurance company or other party as a result of a liability judgment. Many people wonder what a structured settlement payment is.

A structured settlement payment is a way to settle a large financial debt with smaller payments over time. This is a very common method of payment for large sums. This has been going on since the 1970s. For many, the structured settlement payment can be very convenient. It is nice peace of mind to know that you will always be receiving consistent payments. 

However, for people who need cash immediately, a structured settlement payment might be less convenient. If a damage is incurred which requires up-front capital, this type of payment arrangement might be very ineffective. This is why some companies will offer to buy a structured settlement agreement. This would involve them paying a smaller lump sum in exchange for the right to collect your structured settlement payment over time. While they will be getting more of the actual money than you, it can help you get necessary cash right now. 

Whether you want to accept a structured settlement payment or a lump sum is a decision you must make for yourself. There are pros and cons to both choices. Only the metrics of your unique situation will inform you as to which decision makes sense in your case. 

The structured settlement payment is becoming a typical way for many companies to settle large payments. For many people, the security offered by such a payment arrangement is welcomed. However, others prefer going through a structured settlement broker to find a good deal on a lump sum. It is up to the person receiving the payments to decide which option works best.

This Financial Services article was written by George Mandala on 11/4/2009

George is a Financial Consultant