The person on whose life an annuity is based and generally the person receiving or entitled to the annuity payments.
Annuity
An annuity is a contract issued by a life insurance company that can provide income for a specified time period, such as a number of years or for the life of an individual.
Annuity Benefits
The payments that will be paid pursuant to the annuity contract during the payout period.
Annuity Broker
A financial investment professional who provides information and advice regarding the purchase of annuities.
Annuity Issuer
The company issuing annuity payments, usually a life insurance company.
Annuity Payment Period
The period of time that the annuity payments are designated to last.
Annuity Start Date
The date designated for annuity payments to begin, the first payment date.
Assignee
Refers to the person or entity who is “assigned” payments (or other legal obligations or liabilities). When you sell a structured settlement to a structured settlement buyer or factoring company, that company becomes the “assignee”.
Beneficiary
The person(s) or entity designated to receive guaranteed structured settlement annuity payments in the event of the annuitant’s death.
Best’s Rating
A.M. Best & Company rates insurance companies based primarily on their ability to pay out policyholder claims in much the same way that credit reporting bureaus rate consumers.
Bonds
Debt instruments issued by a government or corporate entity for a period exceeding twelve months. The bondholders are repaid over time, with interest.
Claim
In law, the relief sought by a plaintiff in a civil suit. In insurance, the form submitted by a policyholder following a loss or injury.
Consideration
The benefit negotiated between two parties when entering into a contract. In a structured settlement factoring transaction, this includes the promise to pay the purchase price to the annuitant who is selling structured payments.
Contract
An agreement, typically written, between multiple parties enforceable by law. The contract in the sale of structured settlement payment rights is sometimes referred to as a “transfer agreement”.
Court Order
A legally binding ruling issued by a judge or properly empowered administrative officer. See Judgment.
Defendant
A person or institution against who a civil action is brought in a court of law; the person or entity being sued. See Plaintiff.
Deferred Annuity
An annuity in which payments begin at a stated time in the future.
Dependents
A person dependent upon a contributor. Dependents include domestic partners, natural children, stepchildren, legally adopted children and children for whom the contributor is the legal guardian.
Discounted Present Value
As it relates to structured settlements, a Discounted Present Value is what factoring companies calculate in order to make an offer to purchase structured settlement payments. The Discounted Present Value is less than the future value of payments because the annuity payments are due in the future instead of today.
Encumbrance
A lien or claim on property. See Lien.
Escrow
An arrangement typically holding money or documents in trust (“in escrow”) by a trusted party until certain agreed conditions are met.
Face Amount
The amount that will be paid in case of death (life insurance) or at maturity (bond or other investment).
Factoring
The process by which the right to receive payments under a structured settlement or other future payment obligation is sold by the original payment recipient to a third party at a Discounted Present Value.
Financial Affidavit
A sworn statement of income, expenses, property (assets) and/or debts (liabilities).
Funds Transfer
Money that is withdrawn from one account and placed into a different account according to specific instructions.
Gross Advance Amount
The sum payable to the payee or as consideration for a transfer of structured settlement payment rights before any disclosed reductions or expenses.
Guaranteed Payments
Payments made under an annuity contract regardless of whether the annuitant is living or deceased.
Guardian
A person who has the power and obligation to care for another person and/or to manage the property rights of another person, who is either a minor or legally incapable of taking care of their affairs.
Independent Professional Advice
Advice of an attorney, certified public accountant, actuary or other licensed professional adviser provided within the context of the sale of structured settlement payment rights.
Insurance Settlement
The payment of proceeds by an insurance company to an insured to settle an insurance claim.
Internal Revenue Code
The body of federal laws, enacted by Congress, governing taxes in the U.S.
Joint Annuitants
Two or more recipients of the same annuity benefit payments.
Judgment
The ruling of the court. As it relates to structured settlements, the decision a judge makes to either approve or deny the request to transfer structured settlement payment rights. See Court Order.
Legal Representative
A person acting for and legally authorized to execute a contract for an individual.
Lien
A legal claim against an asset in order to help ensure the payment of an obligation. See Encumbrance.
Life Contingent Payments
Payments that will be made only if the payee/annuitant is alive when the payments are due. See Lifetime Payments.
Lifetime Payments
Annuity payments that are guaranteed until the death of the annuitant. See Life Contingent Payments.
Liquidity
The ability to have ready access to an investment’s monetary value.
Lump Sum Annuity
An annuity that features a single payment, or periodic lump sum payments in the future, as opposed to payments made pursuant to a date specific periodic schedule, like monthly payments.
Lump Sum Payment
A sum of money paid in a single installment.
Net Advance Amount
The sum payable to the payee as consideration for a transfer of structured settlement payment rights after any disclosed reductions for transfer expenses or other disclosed reductions to be made from such consideration. See Net Purchase Price.
Net Purchase Price
Price of the transferred property agreed in the Transfer Agreement, excluding any associated fees or costs incurred. See Net Advance Amount.
Non-qualified Structured Settlement
These are periodic payments that are not part of a personal injury settlement, as defined in the IRS Code, such as punitive damages and not excluded from gross income.
Notarize
The act of a notary witnessing a person signing a document. Many legal documents require a notarized signature to ensure the signature is legally valid.
Obligor
The party owing money to another as the result of a judgment or court settlement.
Partial Purchase
When a client sells only a portion of their structured settlement annuity payment rights.
Payee
The party to whom money is paid. Usually the payee is the person to whom the annuity issuer makes annuity payments.
Payment Stream
Payments received periodically from an annuity.
Period Certain
A pre-determined period of time during which structured payments are to be made, regardless of whether or not the beneficiary dies during that period. See Term Certain.
Periodic Payments
Payments that are paid or received regularly, typically on a monthly, quarterly, or annual basis.
Personal Injury
Under tort law, an injury to one party due to negligence of another party outside of the workplace.
Plaintiff
The aggrieved party in a civil or criminal case who files suit against a defendant.
Policy Limit
The most an insurer is obligated to pay in monetary damages for a specific claim under an insurance policy for a covered claim.
Present Value
Also known as Discounted Present Value, this refers to the value of a future income stream in today’s dollars. It is used in determining the purchase price of a structured settlement or annuity in the secondary market.
Purchase Price
This is the dollar amount that the purchaser offers to pay for the asset.
Qualified Assignment
When the original party obligated to make payments to a lawsuit claimant or beneficiary transfers, or “assigns” those payment obligations to another party under regulations set forth in the Internal Revenue Code.
Quote
A stated price for assets or services. A structured settlement quote refers to the lump sum that a potential buyer will pay the seller, on the date when the seller will receive the payout.
Risk
The possibility that an asset or investment will not perform to expectations or result in the loss of part or all of its value over time. Companies purchasing structured settlement payment rights, such as Annuity Transfers, assume a degree of risk when purchasing the right to receive structured settlement annuity payments. Receipt of the purchased payments is fully dependent on the issuer meeting its underlying financial obligation.
Settlement Agreement
The legal contract between parties to litigation specifying how much and under what conditions the defendant must provide relief to the plaintiff in final resolution of a lawsuit.
Settlement Annuity
An annuity featuring customizable cash flows that may be of the type used as a “qualified funding asset” pursuant to IRC 130(d). The annuity features payments made over time to a plaintiff in a lawsuit in return for agreeing to resolve the litigation.
Settlement Date
The date when a Settlement Agreement becomes legal and final.
Special Power of Attorney
Gives a person legal authority to act on behalf of another person under defined circumstances.
Stipulation
An agreement or concession made by parties in a judicial proceeding (or by their attorneys) relating to the business before the court.
Stream of Payments
Payments received periodically from a structured settlement annuity policy.
Structured Settlement
A structured settlement is a financial arrangement, defined by Internal Revenue Code as periodic payments a claimant accepts to resolve a personal injury tort claim. A definition of “structured settlement” can be found in Internal Revenue Code Section 5891(c)(1) (26 U.S.C. § 5891(c)(1)), which defines a structured settlement as an “arrangement” with the following requirements: A structured settlement must be established […]
Structured Settlement Agreement
The agreement, judgment, stipulation or release embodying the terms of a structured settlement, including the rights of the payee to receive periodic payments.
Structured Settlement Funding
The act of funding a structured settlement by a defendant or qualified assignment company.
Structured Settlement Obligor
The party that has the continuing periodic payment obligation to the payee under a structured settlement agreement.
Term Certain
A pre-determined period of time during which structured payments are to be made, regardless of whether or not the beneficiary dies during that period. See Period Certain.
Term of Policy
Period for which the policy runs. For term insurance, this is the length of time the death-benefit protection is available.
Time Value of Money
Financial concept that explains the effect of the passage of time on the value of money today, and the value of future money if accepted today.
Transfer Agreement
The agreement providing for a transfer of structured settlement payment rights from the annuitant/payee/seller to a purchaser in return for consideration to be paid after court approval of the transaction.
Transferee
A party acquiring or proposing to acquire structured settlement payment rights through a transfer.
Underwriter
The insurance company receiving premiums and accepting responsibility for fulfilling the policy contract.
Workers Compensation
Compensation that covers the medical expenses and lost income of employees if they are hurt in the course of doing work-related activities.
Wrongful Death
When one person’s death is caused by the negligent or intentional act of another.