A structured settlement is an arrangement in which payments are made over time after a judgment in a lawsuit or an insurance claim. Some settlements include a portion of the payout up-front, with the remaining balance "structured" into monthly, bi-annual or annual payments.
Structured settlements were created in the mid-1970s after the Internal Revenue Code allowed defendants to purchase annuities in order to fund financial obligation. The annuities paid out over a period of time, paying the defendant's judgment. These structured payment plans were devised for "large catastrophic injury cases," according to RinglerAssociates.com, but now they are just as likely to be used for small-scale cases, with some even under $50,000.