Suffering a workplace injury is stressful enough, but then comes the difficult decision of how to manage your workers’ compensation benefits. Do you take the immediate lump sum or choose a structured settlement? Understanding your options is crucial to ensuring your peace of mind during recovery.
Structured settlements ensure stable cash flow over time
Similar to a paycheck, structured settlements provide regular payments over a predetermined period. You will receive a constant income stream to help cover ongoing medical expenses and daily living costs. This approach may be particularly beneficial if you have long-term medical needs or if you cannot return to work for an extended period.
With structured settlements, you might be able to arrange for larger payments during critical recovery periods or when you anticipate significant medical expenses. These tax-free payments allow you to maximize your workers’ comp benefits.
On the downside, structured settlements may not provide the flexibility some injured workers need. For instance, you might find yourself short on funds if unexpected large expenses arise. Inflation can also erode the value of fixed payments over time, potentially leaving you with less purchasing power in the future.
Lump sum payments put all your money in your hands at once
A lump sum payment delivers the entire settlement at once, giving you immediate access to the full amount of your settlement. With reduced stress, this financial freedom can allow injured workers to focus on recovery.
With a lump sum, you can manage your money as you see fit. You might choose to invest part of it for long-term financial security or use it to retrain for a new career if your injury prevents you from resuming your previous role.
Lump sum payments, however, come with risks. Without careful planning, you might spend the money too quickly, leaving you without funds for future medical needs or living expenses. There is also the potential for poor investment decisions or financial mismanagement.
Which settlement option is right for you?
In New Jersey, the law allows for both structured settlements and lump sum payments in workplace injury cases. Courts generally favor structured settlements to ensure that the workers’ comp benefits can truly help the injured worker heal.
The right settlement choice can give you the financial support to heal and move forward. A qualified attorney can effectively champion your interests and help you secure the most beneficial settlement for your circumstances.