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Talk the talk on structured settlements!

Like it or not, by discussing structured settlements we are delving into the legal world, which is notorious for it's extensive and obscure (often Latin-based) jargon. So, before the mention of tort, plaintiffs or obligors or induces fear and loathing in those of you who've had no contact with legal matters, let's slay some of these mythical beasts right here in the interests of confidence building. You can face those lawyers and hold your own!

actuary: a specialist statistician who calculates risks, policy premiums, and dividends. With regard to structured settlements, they may calculate the overall value of the annuities or awards involved, the schedules of periodic payments to be followed and the amounts of the payments to be made. Often these people are employees of insurance and factoring companies.

annuity: a fixed sum paid at specified intervals over a period (such as the lifetime of the recipient) in return for payment of a premium.

annuitant: a successful plaintiff who, whether by court order or an out-of-court settlement, becomes the recipient of an annuity. This may take the form of a structured settlement.

factor: a factor provides short term funding (normally for a hefty fee) in situations where longer term funding is due to arrive at some later date under the terms of a contract. In the context of structured settlement funding, a factoring company is one that buys structured settlement annuities that are receivable on a contract basis. It dispenses a cash payment to the vendor of the annuity before the periodic payments become due. Fees are charged and a profit taken from the overall value of the annuity. The vendor therefore loses some of the value of the annuity.

jurisdiction: the extent of the right or power to administer justice and apply laws. Where mentioned on this web site, this means geographical extent.

obligor: a person or other legal entity (e.g. a limited company) that binds themselves by contract to perform some obligation; for our purposes the provider of the structured settlement. In practice his normally means the insurance company of the defendant, or a department of government.

Personal injury law is also known as tort law. It covers circumstances that are independent of any contract.

plaintiff: a person who brings a civil action in a court of law. If that same person is making claim for damages they may also be referred to (colloquially) as the claimant. Should they win their case they become the recipient or beneficiary of the settlement. Should this take the form of an annuity then they become the annuitant.

premium: the amount of money that has to be spent to purchase an annuity.

qualified assignee: a legal entity that qualifies to accept a qualified assignment of liability. In practice such entities are usually life insurance companies, or are subsidiaries of life insurance companies. In the US this refers to qualifying under Internal Revenue Code (IRC) § 130.

qualified assignment: a transaction under a structured settlement agreement in which the original obligor (i.e. the defendant or carrier of the defendant) transfers their liability to make the future periodic payments required by the agreement to a qualified assignee. The assignee company is usually related to a life insurance company and will most commonly purchase an annuity from that life insurance company. A qualified assignment of liability cannot be made without plaintiff's agreement. Very often the assignment will release the defendant from all future obligations, although this is not a requirement of US tax law. In the US, a qualified assignment is an assignment conforming to Internal Revenue Code (IRC) § 130.

qualified funding asset: annuities provided by life insurance companies and Government or Treasury obligations are generally the only assets that are allowed to be used by qualified assignees to meet the periodic payments called for by structured settlement agreements that are paid free of tax liabilities.

tort: a civil wrong (i.e. a wrong which does not fall under the criminal code), whether it be a wrongful act or a failure to act, intentional or accidental and from which injury to another results. There are three categories: negligent torts, intentional torts and strict liability torts. The most common cause of tort lawsuits is negligence, i.e. causing an accident that results in injury. Intentional torts occur when injury is purposely inflicted. Strict liability torts cover the manufacturing, marketing or selling defective products that cause injury.