What is a structured settlement annuity?

A structured settlement annuity is a financial product specifically designed to provide regular, periodic payments over time, often utilized as compensation for personal injury claims or other legal settlements. This approach allows recipients to receive their funds in a manner that can better suit their financial needs over the long term, rather than as a one-time lump sum. It can enhance financial security by ensuring a steady stream of income, which can be particularly beneficial for individuals who may need ongoing financial support due to medical expenses or loss of income resulting from an injury.

In contrast, the other options do not accurately describe a structured settlement annuity. A lump sum payment relates to receiving all funds at once, while a life insurance policy focuses on death benefits rather than structured payouts for settlements. Additionally, a retirement savings account and its tax advantages pertain to different financial planning goals than those served by structured settlement annuities. Thus, the correct choice highlights the unique benefit of structured settlement annuities in providing scheduled compensation.