Structured settlements are used as an alternative to a lump sum settlement in a claim. These first came about in the 1970's in the USA, and Canada.
These are commonly referred to as periodic payments.
An injured party settles a tort suit with the defendant or its insurance company to settle and dismiss a lawsuit.
There are two ways that the insurer will handle this.
Assigned:The insurance company paying the debt will make a deal with a third party to assign the payments to be handled by that third party.
The third party may buy an annuity and assign it to pay off the debt over a period of time.
Unassigned:The insurer keeps the periodic payment obligation and finances it by buying an annuity with a specific pay off value from a life insurance company. This pays off the same amount as the debt.
A lot of people getting a structured settlement want to have a lump sum in hand so as to avoid waiting many years to get it all.
There are IRS laws governing tax on settlements.