What role does life expectancy play in non-structured conventional Lump sum awards?
With non-structured conventional lump-sum awards the plaintiff assumes the risk of living longer than expected. In other words, a plaintiff who lives longer than expected might run out of money.Why? Because in non-structured cases the future income award is calculated as the present value of the expected future income stream, which is based on the expected lifespan of the plaintiff. A conventional award is paid as a one-time lump-sum payment, and if the plaintiff lives longer than they were expected to live at the time the award was paid, the award might prove to be too low. In the result, the plaintiff in a non-structured case may exhaust their funds and run out of money.With a structured settlement, income benefits can be paid for life regardless of how long the plaintiff lives. A structure transfers the risk of outliving one’s income to the life insurance company.
