A recent survey of people who had received big settlements in personal injury cases showed more than half who took the lump sum payment had already spent the entire sum at the time of the survey.

"It's been proven that people just aren't of the mind-set to handle a large sum of money," said Mike Wostoupal, vice president of AIG American General Structured Settlements in Houston, which sponsored the survey released in September 2007.

Many who come into sudden wealth through an insurance settlement or a lawsuit victory run the risk of losing the money if they have not learned good money management prior to receiving the cash windfall. Structured settlements provide periodic payments over time rather than a lump sum settlement.

"At first blush, it would appear the [people] most likely to use a structured settlement are those without financial savvy," said Jim Giltner, a certified structured settlement consultant with AXA Advisors in Cleveland. "But we typically find they are used by people with a wealth of financial knowledge."

Unlike lump sum settlements, payments from structured settlements are income tax free and the benefits are guaranteed for life by insurance companies.

The disadvantage, however, is that some people who enter into structured settlements may feel trapped by the periodic payments when they wish to make a big purchase such as a home and are prohibited from borrowing against future payments.

People with good money skills would come out better by accepting a lump sum settlement and investing it themselves, but they are the exception rather than the rule.

The AIG American General survey showed that 35 percent of Americans with no knowledge of structured settlements would take the lump sum, but after learning the merits of structured settlements, 73 percent of them preferred the lifetime payments.

But Chris Chaney, vice president of Fort Pitt Capital Group in Green Tree, said the rate of return on annuities guaranteed by insurance companies was usually lower than the average rate of return of the equity market.

"You have to remember you are giving up the entire principal for a guaranteed income stream," Mr. Chaney said. "You have to consider the rate of return you will get over the years.

"I'd say if you are reasonably disciplined in your spending, you may do better over the long term by investing the lump sum with a reputable money manager."

The strongest and most impressive benefit of structured settlements, though, is the guaranteed payments.

Gary Brant, president of Brant Hickey & Associates in Sewickley, said he recently set up an annuity for a 33-year-old man that will start with $3.5 million, but pay the man an estimated $16 million over the expected course of his lifetime. His payments are guaranteed for 20 years in the event he dies and has heirs, but otherwise will last as long as he lives.

"The safety of the annuity is there's a whole spendthrift protection built in," Mr. Brant said. "I've had people call and thank me for this because 20 years down the road they are still getting checks."

Larry Winget, the best-selling author of "You're Broke Because You Want To Be," said he would suggest that people who come into a large sum of money find a financial adviser.

"Any settlement will be seen as unearned money, and unearned money is rarely respected as much as an earned paycheck," Mr. Winget said. "Past performance is always a predictor of future performance. If you've been wasteful in the past you will be in the future, especially with settlement money."

He said despite whatever pain and suffering it took to receive a settlement, many people treat the payment as though they won a lottery.

"Getting a lump sum is a great opportunity," Mr. Winget said. "If it happens, people should take advantage of it. Save it. Invest it. Live moderately and keep their lifestyles in check."

Congress created structured settlements in the early 1980s to provide long-term financial security for minors and people who are permanently disabled and might be tempted to misspend a large payout that is meant to last a lifetime.

Mr. Giltner said another beauty of structured settlements was when parents or guardians set them up for minors, it insures the minor a lifetime income stream that is protected if and when the child grows up and gets married and divorced.

"Parents love it," he said. "It protects future assets now when the child is young, not knowing how they'll handle money or what type of spouse they'll end up with."

Mr. Giltner said that although the child can't use the unreceived portion of the structured settlement as collateral, banks still take notice. "[The child] can show the bank a policy from an A-rated insurance company showing he's guaranteed an income for life."