Insurance Settlements

Insurance settlements are not always fun – although they can be if you are awarded a large payment by the insurance provider. Basically, an insurance settlement is a payment that an insurer makes to you to settle an insurance claim according to the terms of your insurance policy.

For example, let’s say you have a typical car insurance policy that offers you $100,000 of personal injury protection. If you get in an accident and need $45,000 worth of medical treatment, you are entitled to that $45,000 from the insurance company. Now, this is where you should read the fine print on your insurance policy very carefully. Depending on the terms of the insurance contract, the insurance company may process your settlement quickly or slowly. Also, your insurance company may elect to pay you in several regular chunks instead of one lump sum. The nature of the settlement will depend on the terms you have agreed to with the insurance provider.

A settlement for life insurance is a special kind of settlement, because you, the policyholder, don’t actually get any of the insurance money yourself. However, you can specify one or more beneficiaries who will receive percentages of your policy’s settlement payout if you pass away during the life of the insurance policy. That is one basic type of life settlement. The other kind is when you sell your life insurance policy to a bank or other financial institution in return for an immediate cash settlement, or lump sum payment. If your policy is for $500,000, you’ll be paid a certain percentage of that $500,000, depending on the current value of your policy.