Here in California, many injured workers agree to accept lump sum settlements for their workers’ compensation claims. But do these settlements work for everyone?
Below, we discuss the pros and cons of accepting lump sum workers’ compensation settlements.
Some injured workers do benefit from lump sum settlements
Compromise and release settlements take into account potential future medical costs when calculating a claim’s worth. But these depend on the claimant’s abilities to manage larger sums of cash, their current financial status and their health to be effective.
For instance, if their workplace injury was very serious, they could face a shorter-than-average lifespan. In these cases, it can make better sense to receive one lump sum payment to use during what remains of their life.
Others benefit more from structured settlements, instead
Anyone unsure of their ability to manage their financial affairs may benefit more from a structured settlement, where they receive ongoing payments over time. Some claimants wind up blowing their funds when they receive money all at once.
A structured settlement can be useful, too, to keep someone from becomming overwhelmed by family and friends beseeching them for “loans” that wind up being gifts. These folks may be better served by agreeing to stipulation and award settlements paid out on a preset schedule.
It’s common to be unsure which option to choose for a workers’ comp settlement — but this is a decision that you don’t have to make on your own. Your legal team can help you assess the situation and choose the option that makes the best sense for you and your unique health and financial circumstances.