Lump-Sum and Structured Settlements

A settlement can be reached at any point throughout the workers’ compensation process. However, settlements are always voluntary and can never be compelled. If your claim results in a settlement, there are two options you will have to choose from. You can either take the settlement as a lump-sum payment or as a structured series of payments. Both options have their pros and cons, and which one is right for you will depend on a variety of factors.

Lump-Sum Settlements

Lump-sum settlements are single-time payouts that are typically calculated based, to an extent, on your expected future medical expenses and wage loss. This type of settlement may be a good idea if you have other sources of income for the long-term and need money right away. In exchange for near immediate payment, you may receive a slightly lower amount than if you were to opt for the structured settlement option.

Structured Settlements

Weekly Compensation Check

Structured settlements, or annuities, involve many payments spread out over a long period of time. This may be a better settlement option if you need a steady income over time or if you are concerned about spending your lump-sum too quickly. You will have less spending power up front, but in return, you may receive a slightly greater amount over time.

One of the risks with opting for an annuity is that the payments may stop if you die. If this happens, your family will not continue to receive the settlement checks unless you specifically negotiated for that when the settlement was offered. Additionally, if you later decide that you would rather have a lump-sum, you are generally unable to sell workers’ compensation annuities for cash. Once a payment method has been chosen, there is not much you can do to change it.

Which is Right for You?

Your financial situation, spending habits, and health can all impact your decision when it comes to choosing between a lump-sum or structured settlement. If you need money now, a lump-sum may be the preferable option, even if it results in less compensation overall. However, if you are prone to spending money quickly, it may be better to structure the settlement to be paid out over time. And, if you are suffering from declining health due to an occupational illness and are unable to negotiate that the annuity be guaranteed, a lump-sum may help to support your family should you pass.

Hillsberg Law

My name is Geoffrey Hillsberg, and I have been solely practicing workers’ compensation law in the State of Pennsylvania since 1995. If you have been injured on the job, please contact my law office today. I will fight for your right to compensation after a workplace injury.


The advice offered above is general in nature and may not be applicable to every case. Consultation with an attorney is highly recommended. Reliance on this advice does not represent the formation of an attorney-client relationship in the absence of a fee agreement with Mr. Hillsberg.