Sell Structured Settlement Structured Settlement Basics

Question 1

What is a structured settlement?

Accepted Answer

A series of periodic payments made to a plaintiff following a legal settlement

Answer

A lump-sum payment from a lawsuit

Answer

A type of retirement savings account

Answer

A government benefit program

Question 2

Structured settlements are most commonly established as a result of which type of case?

Accepted Answer

Personal injury lawsuits

Answer

Bankruptcy proceedings

Answer

Criminal cases

Answer

Contract disputes

Question 3

Which financial instrument is typically used to fund a structured settlement?

Accepted Answer

Annuity contract

Answer

Municipal bond

Answer

Certificate of deposit

Answer

Money market fund

Question 4

Who typically purchases the annuity that funds a structured settlement?

Accepted Answer

The defendant or their insurer

Answer

The plaintiff

Answer

The plaintiff's attorney

Answer

The court

Question 5

Structured settlement payments are generally treated how under US federal tax law?

Accepted Answer

Tax-free to the recipient

Answer

Fully taxable as ordinary income

Answer

Subject to capital gains tax

Answer

Taxable only above a threshold

Question 6

The Periodic Payment Settlement Act of 1982 did which of the following?

Accepted Answer

Provided federal tax incentives encouraging the use of structured settlements

Answer

Required all lawsuits to use structured settlements

Answer

Banned lump-sum lawsuit payments

Answer

Created a federal registry for structured settlements