Education
What Is a Structured Settlement and How Does It Compare to Lump Sum?
• 2 min read
Structured settlements pay out over time. Lump sums pay now. Both have trade-offs.
A structured settlement pays the recovery as a series of payments over time — sometimes for life, sometimes for a defined period. The payments are typically tax-free.
A lump-sum settlement pays the full recovery upfront. The claimant has full control over the money but loses tax-deferred growth.
Structured settlements work well for catastrophic injuries with lifetime care needs, claimants who lack financial management experience, and minors.
Lump-sum settlements work better for claimants who have specific financial plans for the funds, debts to pay off, or business needs.
Pre-settlement funding payoff typically comes from the lump-sum portion of any structured settlement.
Call (800) 297-3834 with questions about funding cases that involve structured settlements.
Frequently asked questions
- Will taking an advance reduce my settlement?
- The advance plus its flat fee is repaid out of the settlement, so your net proceeds are reduced by that amount. It does not affect the gross value your attorney negotiates.
- Is a pre-settlement cash advance a loan?
- No. It is non-recourse funding tied to your personal injury claim. There are no monthly payments, and if your case does not recover, you owe nothing.
- Do I need good credit or a job to qualify?
- No. AARC does not run a credit check and does not require employment or income verification. Approval is based on the strength of your claim and your attorney's representation.
- How fast can I get funded?
- Most approved applicants receive funds in as little as 24 hours once AARC has the case documents from your attorney.
- How much does it cost?
- AARC uses a flat fee rather than compounding monthly interest. Typical advances are $500, $750, or $1,000, and the illustrative payoff at settlement is 2x the advance amount.
About the author
Written by the funding team at AARC — Accident Advance & Resource Center. AARC underwrites pre-settlement cash advances for personal injury claimants and works directly with plaintiff attorneys across 45 states. Our team reviews case documentation daily and writes from that firsthand experience.
This article is general information, not legal or financial advice. Always confirm details with your attorney. Contact AARC or call (800) 297-3834 with questions about your specific case.
