Replying to Rashidjer's note to me:

There's no limit to the possibilities. There would be fewer if we knew the future, but you don't, I don't, and no one else does (not even Warren).

If I were in your shoes, the first place I'd look would be http://www.treasurydirect.gov/indiv/research/indepth/tips/res_tips.htm

All U.S. Treasury securities are guaranteed by the U.S. government, and TIPS (Treasury Inflation Protected Securities) hedge inflation.

Some (many?) banks are now too dishonest and/or too broke to consider parking big money with them, so I'd feel more comfortable with laddered CDs at well-financed credit unions (they hate banks) and S&Ls. Look into both if you'd be more comfortable with laddered CDs.

it's true Genie, as we all know no job is secure nowadays. I do work as a computer programmer to support my family.
My intention is to split the 500,000 into 5 different banks (100,000 CD for a long period of time.) Can you please advise me about the duration of CD that yields more interest?
Or do you have any better suggestion?
tkx

Choose your poison:

The trouble with an annuity (structure settlement) is that the payments are fixed but constantly worth less and less because of inflation. By the time your 8-year-old is 25, the income flow will probably buy only about half as much.

The trouble with saving and investing is that savings also lose value to inflation and investing requires knowledge, skill, luck, and lots of homework.

A better response requires more knowledge of your financial position, the level and reliability of your income, and the state of health of you, your son, and others in your family.

If it's for your son, I would imagine that these assets would be held in trust. Does the trust dictate how they are to be allocated. And when you mention life-exptectancy and malpractice, are there other issues to be considered? If you are able to get $500k tax free upfront, then by all means do. But this sounds somewhat improbable because that is way much more than $500k over time.

that is a malpractice settlement for my 8 years old son, and It's tax free

Rashidjer - this questions need some more information. How old are you - what is the $500,000 coming from? Did you win the lottery? Do you have a choice? Are there taxes involved?