Settlement Funding Glossary

Annuitant

An annuitant is the person on whose life an annuity is based. Usually the annuitant is the person who is, or will be, receiving annuity payments.

Annuitization

Annuitization is the point when an annuity begins to dispense periodic income payments to the payee (who is the annuitant, in most cases).

Annuity

An annuity is a policy that provides income at stated future intervals to a payee or annuitant.

Annuity Benefits

Annuity benefits are the periodic payments that will be paid to the payee or annuitant.

Annuity Contract

An annuity contract is an agreement between an annuity owner and an annuity issuer. A complete annuity contract will verify the annuity owner, the annuity issuer, the policy number, all annuity benefits, the payee/annuitant/measuring life, and the original beneficiary.

Annuity Issuer

The annuity issuer is the insurance company that issues the annuity and sends payments to the annuitant or payee.

Annuity Owner

The annuity owner is the entity that purchased and now owns the annuity.

Beneficiary

A beneficiary is the person(s) or entity(ies) who is designated to receive annuity payments or a death benefit when the original annuitant or payee dies. In many cases, the original annuitant has the power to request a beneficiary change via a written request.

Court Order

A court order is a legally binding ruling issued by a judge or properly empowered administrative officer. In the case of structured settlement transfers, a court order must make the necessary statutory findings and approve the transfer of structured settlement payment rights.

Discount Rate

The discount rate is the interest rate used to compute the present value of future cash flows.

Fixed Annuity

A fixed annuity is an insurance contract in which the annuity issuer makes fixed (i.e. non-flexible, cannot be increased or decreased) payments to the annuitant.

Gross Purchase Price

The sum payable to the payee or on the payee’s account as consideration for a transfer of structured settlement payment rights, before deductions of any transfer expenses. See also: Net Purchase Price.

Life Expectancy

The number of years a person is expected to live.

Lump Sum Payment

A Lump Sum Payment is the sum of money paid in a single installment.

Net Purchase Price

The net purchase price is the sum payable to the payee or on the payee’s account as consideration of a transfer of structured settlement payment rights after any and all applicable deductions. See also: Gross Purchase Price.

Payee

A payee is the person to whom the annuity issuer makes annuity payments.

Payment Stream

Payment stream refers to the amounts and due dates of future payments receivable under a structured settlement, an annuity, or lottery payout. See also: Periodic Payments.

Period Certain Payments

Period certain payments will be paid by an annuity issuer, in accordance with the annuity contract, regardless of the original annuitant’s death. Payments made after the death of the original annuitant will be made to the policy’s beneficiary.

Periodic Payments

Periodic payments are payments that are paid or received regularly. See also: Payment Stream.

Qualified Assignment

A qualified assignment is an agreement whereby the original obligor assigns its obligations to make future payments to a third party, who becomes the annuity owner. These assignments are generally made to satisfy Internal Revenue Code requirements to qualify for the favorable tax treatment of a structured settlement. After a qualified assignment, the annuity owner generally satisfies their obligation by purchasing a structured settlement policy from an insurance company (the annuity issuer).

Structured Settlement

A structured settlement is a financial or insurance arrangement whereby a claimant, guardian or administrator agrees to resolve a personal injury claim or wrongful death claim by receiving periodic payments on an agreed schedule rather than as a lump sum at settlement.

Release and Settlement Agreement

An agreement between two parties to actual or potential litigation, under which a claimant typically releases the other party from all liability over an incident, for injuries known and unknown, in exchange for a promise of future payments. A complete copy of your Release and Settlement Agreement will verify your rights to the structured settlement.

Terms of the Structured Settlement

The terms of your structured settlement can be found in the annuity contract, the qualified assignment, the Release and Settlement Agreement and any orders approving or governing your settlement.