What’s the Best Choice for My Workers’ Comp: A Lump Sum Payout or Periodic Payments?

Work injuries can happen in any industry. If you’re injured or fall ill on the job, you may be eligible to receive workers’ comp benefits from your employer’s insurance company. If your claim is approved, you can expect to receive a portion of your lost income and coverage for injury-related medical expenses. This payment can be a lump sum or periodic, depending on your situation. Each type has its benefits and drawbacks, so how do you know which is right for you? Let’s break it down.

Lumpsum Settlement

With a lump sum settlement, your employer’s insurance company offers you the full benefits you are entitled to at once. This means you’ll not expect more money from your employer or the insurance company. A lump sum payment has its benefits and drawbacks. Some of the benefits include the following:

• You have enough cash to start over, and you can spend it however you see fit
• You have enough money to pay for immediate or unexpected expenses
• If your bills have piled up, you can pay them immediately, keeping your creditors at bay.

However, several risks come with getting a lump sum payment, such as:

• You risk spending all the money you receive before reaching full recovery. If your injury requires additional treatment later on, you won’t be able to request more funds from your employer’s workers’ comp insurer.
• You could be eligible for Social Security benefits, which could be affected by your lump sum payment.
• When family and friends learn you have access to a large amount of money, you may feel obligated to share it with them.

A lump sum may be a good option if you need financial flexibility, clearly understand your long-term medical needs, and are confident in your ability to manage the funds wisely.

Periodic or Structured Settlements

This type of settlement is extended over a long time, possibly even for life, in a series of smaller structured payments. So, you may receive a portion of the money immediately as a lump sum, and then the rest of the cash will be paid over several months or years, depending on the settlement terms. A structured settlement has several benefits, including the following:

• The regular payments ensure you have funds available to cater for future medical costs, if necessary
• Since structured payments are spread out, they may lower your taxable income, unlike a lump sum settlement
• You have less temptation to spend or give away cash since you don’t have all the money at once.

However, it’s also got some drawbacks, including:

• Limited access to funds in case you need to make a huge purchase or cover an emergency expense
• Once you agree to the terms, it may be challenging to modify the schedule
• If the insurance company or entity managing your settlement goes bankrupt, your future payments could be at risk.

A structured settlement might be the right choice if you prefer financial security over time, have ongoing medical expenses, or worry about mismanaging a lump sum payout.

Ultimately, it is best to consult a workers’ compensation lawyer to discuss your options and negotiate a settlement that aligns with your needs.

Contact a Vermont Workers’ comp Lawyer Today

If you have suffered an injury at work, consult an experienced Vermont workers’ comp lawyer at Sluka Law PLC at 802-457-1000 today to discuss the best strategy for your case.