What is a Structured Settlement?

A Structured Settlement is a payment of money for a personal injury claim where at least part of the settlement calls for a future payment. These payments may be scheduled for any length of time - even for as long as the claimant's lifetime, and may consist of installment payments and/or future lump sum payments. Payments can be fixed or can vary, and are structured to meet the specific needs of the claimant.

No matter which way the payments are designed, all income received by the claimant is free of income tax, as outlined in CRA Income Tax Act IT-365R2 Section 2 and 3.

Life insurance company annuity contracts are the approved and preferred means of funding because of their pricing and flexibility for settlement designs and security.

Structured Settlements provide money management with no additional fees and expenses. And since the returns of a structured settlement are totally tax free, the amount of interest necessary for the individual investor to earn to outperform the structured settlement becomes rather prohibitive.

The table below demonstrates how much interest the self-investor would have to earn on a taxable basis to equal the tax free payout of a structured settlement:

Tax Bracket

Rate of Return





















A Structured Settlement is a proven, effective solution for the needs of personal injury claimants. Claims professionals, plaintiff attorneys, judges and defense attorneys advocate the use of structured settlements because they effectively meet a claimant's needs for security, as well as provide more benefits over time than a single lump sum.

Additionally, structured settlements avoid premature dissipation of funds. Some studies show that within 3 years, 70% of people receiving lump sums are out of money and within 5 years, that number jumps to an alarming 90%.

A properly designed structured settlement will provide for the long term security of an injured party or surviving spouse, education funds for children’s college or university, payments for future medical expenses, and money for retirement.

The payments are guaranteed by the life insurance company and/or their assignment company. Surety bonds, guarantee agreements, and secured creditor designations make structured settlements a very secure investment.

No other investment will guarantee a tax-free lifetime stream of payments with the security of a life insurance company. All companies utilized by MWFS have the highest ratings offered in the industry.

Feel free to contact us  to obtain additional information concerning structured settlements.