Structured Settlements Cheat Sheet 2026

The 30 highest-yield Structured Settlements facts, distilled from real exam questions. Print it, save it as a PDF, or study it here — free, no sign-up.

1. Which type of damages in a structured settlement are generally NOT excluded from the claimant's taxable income? → Punitive damages
2. Which of the following is a primary consideration when designing a payment schedule for a catastrophically injured claimant? → Ensuring sufficient funds for lifetime medical care, rehabilitation, and living expenses
3. The IRC Section 130 deduction available to the assignment company is equal to: → The amount paid to purchase the annuity funding the assigned obligation
4. Which professional organization in the US primarily represents structured settlement industry professionals? → National Structured Settlements Trade Association (NSSTA)
5. What is a 'life-contingent' structured settlement payment? → A payment that is made only if the claimant is still alive
6. Which of the following payment features can be included in a structured settlement annuity? → Cost-of-living adjustments (COLA) tied to CPI
7. Which of the following is NOT a typical type of structured settlement payment schedule? → Declining government bond yields
8. Who owns the annuity contract in a typical structured settlement qualified assignment? → The qualified assignee
9. What is the typical waiting period required between the disclosure statement and the signing of a transfer agreement under SSPAs? → At least 3 days but commonly 3–10 business days depending on the state
10. Under IRC §5891, what federal excise tax is imposed on factoring companies that purchase structured settlement payment rights without court approval? → 40%
11. What is a structured settlement? → A series of periodic payments made to a claimant over time as part of a legal settlement
12. Which federal agency reviews Workers' Compensation Medicare Set-Aside proposals? → Centers for Medicare & Medicaid Services (CMS)
13. Which IRC section exempts personal physical injury structured settlement payments from federal income tax? → IRC §104(a)(2)
14. Under which IRC section are workers' compensation periodic payments excluded from federal income tax? → IRC §104(a)(1)
15. Which Internal Revenue Code section excludes structured settlement periodic payments for physical personal injury from gross income? → IRC Section 104(a)(2)
16. To preserve the tax-free status of structured settlement payments under IRC Section 104(a)(2), the annuity used to fund payments must be purchased by: → The defendant, insurer, or a qualified assignment company — not the claimant
17. What is 'double-dipping' in the context of structured settlement factoring? → A claimant selling the same payments to two different factoring companies
18. A claimant sells future structured settlement payments to a factoring company for immediate cash. The IRS generally treats the proceeds from this sale as: → Ordinary income taxable in the year received
19. What is the role of a structured settlement consultant or broker? → To design and negotiate the structured settlement payment plan on behalf of the plaintiff
20. Which of the following would cause a structured settlement to lose its income-tax-free status? → Allowing the claimant to accelerate, commute, or assign payments at will
21. Workers' compensation structured settlements derive their tax-free status from which IRC section? → IRC Section 104(a)(1)
22. What is the primary advantage of a structured settlement over a lump-sum payment for a physical injury claimant in the US? → All periodic payments are income-tax-free under IRC §104
23. A structured settlement for emotional distress claims with no underlying physical injury would result in: → Fully taxable periodic payments as ordinary income
24. What does 'inflation risk' mean in the context of a level-payment structured settlement? → The risk that fixed payments will lose purchasing power over time as prices rise
25. What does 'present value' mean in the context of structured settlements? → The current worth of future payments discounted at an assumed interest rate
26. Why might a claimant prefer increasing payments over level payments in a structured settlement? → Increasing payments help offset inflation and rising medical costs over time
27. The total stream of structured settlement periodic payments, including the portion attributable to earnings growth within the annuity, is: → Entirely excluded from the claimant's gross income under IRC Section 104(a)(2)
28. What is the typical timeline from application to court approval of a structured settlement transfer? → 45–90 days, depending on state procedural requirements and court calendars
29. Which of the following cases does NOT qualify for income-tax-free treatment under IRC §104(a)(2)? → Employment discrimination (non-physical) settlement
30. What does 'annuity certain' mean in structured settlement planning? → An annuity that pays for a fixed period regardless of the annuitant's survival