It is surprising to note that despite the significant tax subsidy being extended to structured payments arrangements, it appears that the majority of personal injury settlement awards are being paid as lump sum payments, and not in the form of structured settlement arrangements.

Historically, for most lawsuits that have involved a structured settlement, the insurers seems to have paid approximately half of the total settlement amount as an annuity, and the remaining half as a lump sum.

Considering the significant amount of tax subsidies that are being extended to the Injured parties -in return for opting for a structured, long term payment arrangement -one would have thought that a majority of recipients would have elected to be compensated in the form of structured annuities that guarantee regular/steady revenue stream over many years.

Industry specialists with many years of experience in the structured settlement trade, and others (companies that sell life insurance products, underwriters, and legal/financial professionals that specialize in structured settlements) have put forward many possible theories/explanations for this rather interesting phenomenon -some of which are mentioned below:

• Difference in Perception of Personal Health, Prognosis: One of the most common factors that makes many recipients consider opting for a lump sum payments over a periodic payment arrangement has to do with the concerns they have about their own heath and their long term prognosis. Many recipients have a more pessimistic perception of their health conditions, and their overall prognosis than what others may perceive distally. If a recipient were to truly believe that he may not live as long as the actuaries estimate may seem to suggest, it would be only natural for him to want to opt for a lump sum amount in stead of agreeing to a payment plan that would be stretched over many years.
  
• Differing Financial Expectations: If a recipient believes that he may be able to generate better financial returns by managing his resources on his own than what may be feasible under a structured settlement arrangement annuity contract, he will be more than likely to want to opt for a lump sum payment in stead of a structured settlement. It is also possible that a recipient may feel more secure being in direct control of the entire "settlement" amount from early on. Others may feel that the fair-market value of the lump sum payment at the present time is greater than the value of the installments spread over many years. In some cases, it may just be the simple sense of being in complete control of one's financial destiny that may prompt one to opt for a substantial one-time payment in stead of small payments spread over many years.
  
• Not Much Difference Between a Lump Sum Payment and a Structured Settlement Arrangement: It is not unheard of that some defendants (or life insurance companies working on their behalf) may actually try to corner a recipient into accepting a structured settlement arrangement that allows the defendants to keep most of the tax benefits (if not in its entirety) that the law currently provides. Considering that in most cases, a recipient has no other options but to negotiate with one and only defendant (or a company that may be representing him/her), the recipient may be left with two nearly identical offers on the table -with none offering any significantly better advantage/value over the other. Considering that the defendants have little (if any) reasons to want to pass on some (if any at all) of the tax benefit to the injured party, often a recipient finds that he/she has not much to lose if he/she were to opt for a one time lump sum payment in stead of a payments arrangement that gets stretched over many years. Under such circumstances, a recipient would be more than likely to accept a lump sum payment, put it all behind him/her, and focus on other life issues.