Structured Settlements Structured Settlement Basics 3

Question 1

Which of the following cases does NOT qualify for income-tax-free treatment under IRC §104(a)(2)?

Accepted Answer

Employment discrimination (non-physical) settlement

Answer

Only damages received on account of personal physical injuries or physical sickness are excluded under §104(a)(2); non-physical claims such as employment discrimination do not qualify.

Question 2

What is the role of a structured settlement consultant or broker?

Accepted Answer

To design and negotiate the structured settlement payment plan on behalf of the plaintiff

Answer

A structured settlement consultant advises the plaintiff on payment design options and negotiates terms with the defendant and its insurer.

Question 3

What financial strength rating is commonly required of life insurers funding structured settlements?

Accepted Answer

At least an A- rating from A.M. Best or equivalent

Answer

Industry best practices require life insurers funding structured settlements to carry at least an A- or A rating from A.M. Best to ensure long-term payment security.

Question 4

What is a 'reversionary' structured settlement?

Accepted Answer

A settlement where unused guaranteed payments revert to the defendant upon the claimant's early death

Answer

In a reversionary structure, any guaranteed payments remaining at the claimant's death revert to the defendant or its insurer rather than to the claimant's estate.

Question 5

Which professional organization in the US primarily represents structured settlement industry professionals?

Accepted Answer

National Structured Settlements Trade Association (NSSTA)

Answer

The NSSTA is the primary trade organization representing consultants, life insurance companies, and other professionals involved in the structured settlement industry.

Structured Settlements Practice Test

Structured Settlements Practice Test

Structured Settlements Structured Settlement Basics 3