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What is a Periodical Payment and How do They Help?

Following a serious life-changing injury people sometimes struggle to pay for the cost of their care or general living requirements.

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A periodical payment order may be awarded as a form of compensation for an individual’s future care and support needs.

Financial compensation is traditionally awarded as a lump sum payment, but changes in the law mean that a settlement can be paid as a lump sum, in periodical payments, or a combination of both.

Lump Sum or Periodical Payment?

A periodical payment is paid annually – and tax-free – for each year of a person’s life. Lump sum settlements only were considered unsatisfactory because claimants faced a task of managing a large fund over many years and would often try to preserve the fund due to uncertainties about the future. A lump sum might not cover any inflation in care costs, and, if badly invested or mismanaged, people were left with an element of uncertainty about their future income.

Following a serious injury, there may be a lot of uncertainty regarding finances and care – especially when someone’s condition means that they can no longer work. A periodical payment can offer reassurance in knowing that a regular annual income will be received every year for the rest of their life.

The Advantages of a Periodical Payment

Periodical payments are index-linked, meaning that they increase according to inflation and also taking into account that carers’ wages will also increase. If it is thought that a person’s condition may deteriorate in the future, the payment can be staged so that it could increase, for example, in ten years’ time when the person’s condition might mean that further care will be needed.

When Are Periodical Payments Considered?

Periodical payments are considered when pursuing a serious injury compensation claim. They are paid by the defendant or their insurer, against whom the claim is brought. At that point we would ensure a claimant receives expert financial advice – the cost of which is included in the claim. Whereas periodical payments could apply to any sized case where future financial loss is involved, the disadvantages of a lump sum are not as significant in smaller cases. Also, the expenses of setting up and maintaining periodical payment are often not proportionate in a smaller case.

Gemma Hall is an associate lawyer specialising in serious injury claims at Slater and Gordon’s offices in Manchester.

For further information about financial compensation following a serious injury or for a free consultation to discuss a serious injury, call our No Win No Fee personal injury solicitors on freephone 0800 916 9046 or contact us online.


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