Sell Structured Settlement Structured Settlement Basics 2

Question 1

What term describes the entity that originally owed payments under a structured settlement?

Accepted Answer

Obligor

Answer

The obligor is the party — typically an insurance company — legally obligated to make the periodic structured settlement payments.

Question 2

Which party in a structured settlement is the person entitled to receive the payments?

Accepted Answer

Payee

Answer

The payee is the individual (usually the injured plaintiff) who is entitled to receive the periodic structured settlement payments.

Question 3

What does it mean when a structured settlement includes a 'life contingent' payment?

Accepted Answer

Payments continue only as long as the payee is alive

Answer

Life-contingent payments cease upon the death of the payee, meaning the stream of income is tied to the payee's survival.

Question 4

A 'guaranteed' period in a structured settlement means:

Accepted Answer

A set number of payments will be made regardless of whether the payee lives or dies

Answer

A guaranteed period ensures that a specific number of payments will be made to the payee or their estate even if the payee dies before the period ends.

Question 5

Which federal law specifically governs the assignment of structured settlement payment rights to a factoring company?

Accepted Answer

The Internal Revenue Code Section 5891

Answer

IRC Section 5891 imposes a 40% excise tax on factoring companies that purchase structured settlement payments without obtaining a qualifying court order.

Sell Structured Settlement Practice Test

Sell Structured Settlement Practice Test

Sell Structured Settlement Structured Settlement Basics 2