In any physical injury case, the plaintiff and defendant negotiate issues such as the victim's medical care and basic living and family needs. Oftentimes, one side (or both) will bring in an expert, such as a structured settlement consultant, who provides calculations on the long-term cost of these needs.

When there is agreement on the amount of damages due the injury victim (which can happen before, during or after a lawsuit), the victim can select a periodic payment plan that meets his or her needs, and the defendant will agree to make the future payments via a structured settlement. The defendant then assigns this obligation to an experienced third party, a life insurance company that funds the damage payments with an annuity.

An annuity has been the preferred way of funding because of its pricing and flexibility. An alternative is a trust fund which invests only in United States Treasuries. However, these trusts are not used very often because they are inflexible and can't provide lifetime income.

As these issues involve complex calculations, you should always consult your attorney and a structured settlement consultant.