Sell Structured Settlement Finding Buyers and Pricing 2

Question 1

What is the role of a structured settlement consultant or broker who assists a payee in selling their payments?

Accepted Answer

They help the payee evaluate offers, understand the process, and navigate the transfer transaction

Answer

They underwrite the annuity backing the settlement

Answer

They represent the factoring company in court proceedings

Answer

They determine the appropriate discount rate on behalf of the IRS

Question 2

Why do factoring companies typically pay more for guaranteed structured settlement payments than for life-contingent payments?

Accepted Answer

Guaranteed payments will be received regardless of the payee's death, eliminating mortality risk

Answer

Guaranteed payments have higher interest rates built in

Answer

Life-contingent payments are illegal to purchase in many states

Answer

Guaranteed payments are tax-free to the factoring company

Question 3

How does the financial strength rating of the annuity issuer affect the value of structured settlement payments in the secondary market?

Accepted Answer

Higher-rated issuers produce payment streams valued more highly because there is less risk of default

Answer

It has no effect — all annuity issuers are federally guaranteed

Answer

Lower-rated issuers produce more valuable payment streams due to higher yields

Answer

Annuity issuer ratings only affect new settlement creation, not secondary market pricing

Question 4

What is 'accelerated funding' in the structured settlement purchase industry?

Accepted Answer

A service offered by some factoring companies to pay the lump sum faster after court approval

Answer

Receiving payments before their scheduled due date directly from the annuity issuer

Answer

A method of increasing structured settlement payments by re-investing them

Answer

An IRS fast-track approval process for transfer petitions

Question 5

What percentage of the total face value of payments do payees typically receive as a lump sum in a structured settlement transfer?

Accepted Answer

40–70%

Answer

90–100%

Answer

75–95%

Answer

10–25%

Question 6

Which of the following structured settlement payment types typically commands the highest lump-sum offer from factoring companies?

Accepted Answer

Guaranteed monthly payments beginning immediately and backed by a highly rated insurer

Answer

Life-contingent monthly payments beginning 20 years from now

Answer

Inflation-adjusted payments from a lower-rated insurance company

Answer

Deferred lump sums payable 30 years in the future