Structured Settlements Annuities and Funding Mechanisms

Question 1

What type of annuity is most commonly used to fund structured settlements?

Accepted Answer

Fixed annuity issued by a life insurance company

Answer

Variable annuity

Answer

Equity-indexed annuity

Answer

Immediate variable annuity

Question 2

Who owns the annuity contract in a typical structured settlement qualified assignment?

Accepted Answer

The qualified assignee

Answer

The claimant

Answer

The plaintiff's attorney

Answer

The state insurance guaranty association

Question 3

What is the purpose of state insurance guaranty associations in the context of structured settlements?

Accepted Answer

To provide a safety net covering claimant payments if the issuing life insurer becomes insolvent

Answer

To underwrite new structured settlement annuities

Answer

To regulate the amount of periodic payments

Answer

To approve all structured settlement agreements

Question 4

What is a 'rated age' in the context of structured settlement annuities?

Accepted Answer

An older age assigned to a claimant based on medical impairment, reducing the cost of the annuity

Answer

The legal minimum age to receive a structured settlement

Answer

The age at which payments must begin

Answer

The rating assigned by A.M. Best to the insurer

Question 5

What does 'cost of the annuity' represent in structured settlement negotiations?

Accepted Answer

The present-value premium the defendant or insurer pays to the life company to fund the payment stream

Answer

The total of all future periodic payments

Answer

The claimant's attorney fees

Answer

The face value of the policy

Question 6

What happens to the annuity funding a structured settlement if the claimant files for bankruptcy?

Accepted Answer

Future structured settlement payment rights are generally protected from creditors under federal bankruptcy law

Answer

The annuity is immediately liquidated to pay creditors

Answer

The payments are suspended until the bankruptcy is resolved

Answer

The insurer is required to pay creditors directly