Lump Sum vs. Payments for medical insurance costs are not quite the same as they would normally be under the regular fluctuating medical cost scenario. In a nutshell, lump sum payments would be for short term periods and will not usually cover the entire medical expense incurred. Similarly, if the medical benefits were to be dispensed in fixed monthly installments, then the expenses involved in this would be multiplied by the total number of months that the policy is used over the entire year. If you use up the entire period, your policy ends up costing you more than if you had taken the lump sum payment.

In order to avoid these pitfalls, you should always work with an experienced worker’s compensation lawyer and ask for advice on lump sum versus payments. The best legal counsel will give you a clear picture of your alternatives in terms of appealing the court’s ruling and also help you make the necessary calculations in relation to your present financial situation. There are also ways of making the payments more affordable such as accepting smaller lump sum payment for example.

One of the factors to consider when deciding between a lump sum payment vs. monthly payments is your expectation of future retirement benefits. It is usually considered unwise to take monthly payments for pension when you are only expected to retire after two years or less. On the other hand, if your pension is quite high, you may not want to stop taking it upon retirement. This is because your pension will only increase with inflation and thus will become less valuable in a few years’ time. Consequently, you may end up having to pay more taxes as well.

Yet another good reason to avoid lump sum versus payments when drawing a retirement plan is if you are not required to pay taxes on your pensions at the moment of retirement. Some states require you to pay taxes upon withdrawal of pension plan funds while others do not. It pays to check with your state’s regulations first before deciding on which option to take. Remember that your employer may well be required to contribute to your pension plan as well, and you would owe them money even if they did not contribute as per your plan’s terms.

With lump sum versus payments, it is always wise to check with your employer’s insurance company or worker’s comp policy provider regarding your pension plans and how they are to be taken care of upon retirement. Often times, an insurance company will permit you to withdraw money for medical emergencies or education, but they will usually charge you an early withdrawal fee. Likewise, your worker’s comp policy provider will have their own rules regarding payment of your benefits upon your death. So make sure to inquire about the stipulated finding before you sign anything. Also make sure you read your plan thoroughly and check with your accountant or financial adviser what happens to your money.

With this basic comparison in mind, comparing lump sum versus payments should be relatively easy. The biggest difference between the two is that with a pension plan, your retirement income is guaranteed by the federal government, whereas with a payment plan, your guaranteed income will depend entirely on your employer’s pay scale. This is important to remember especially when making large lump sum purchases such as a home or cars. You will definitely want a guaranteed income during your golden years, so using a payment plan might actually be better for you financially in the long run.