Structured settlements are an established part of North American personal injury practice. Any litigator, judge, mediator or claims adjuster involved in significant personal injury litigation must be able to evaluate the merits of periodic payments in a particular case and to fashion a legally sound structured settlement or periodic payment judgment. As a matter of professional competence, lawyers and judges cannot treat periodic payment as an arcane sidelight.
Periodic payment provides a more cost efficient allocation of risk than lump sum. On receipt of a lump sum, a plaintiff assumes several risks, including mortality, morbidity, investment, reinvestment, inflation and insolvency. These and other risks can have an impact on the claimant’s ability to meet expenses arising from the injuries that were suffered. A plaintiff is not the ideal unit to assume such risks. Instead, insurance companies pool most of these risks, and provide for secure, life-time benefits regardless of such issues.
Structured Settlements and Periodic Payment Judgments by Hindert, Dehner and Hindert (2002)