Settlement Terms

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1. Accumulated Value
   • The full value of the annuity contract paid over time. This includes the principal and any gain associated with the investment. This is sometimes referred to as total value.
2. Administrative Authority
   • With respect to a structured settlement, any government authority vested by law with exclusive jurisdiction over the settled claim resolved by such structured settlement. Typically this is a local court.
3. Annuitant
   • The individual receiving or entitled to the annuity payments. This is normally the plaintiff in the original case.
4. Annuitization
   • When annuity payments begin, or an annuity begins to pay out periodic payments.
5. Annuity
   • The term annuity refers to any stream of fixed payments over a specified period of time. In the case of a structured settlement, the annuity is a tax-deferred contract that can provide an income for a specified time, such as a number of years, or for the life of the individual.
6. Annuity Benefits
   • The guaranteed periodic payments that will be paid to the owner of an annuity during the payout period.
7. Annuity Contract
   • The agreement between the annuitant (normally the customer) and the annuity provider (typically an insurance company) that stipulates the features of the annuity, including the payments and responsibilities of each party.
8. Annuity Issuer
   • The insurance company that has issued a contract to fund periodic payments under a structured settlement.
9. Annuity Owner
   • The individual who has the right to make decisions about an annuity. The owner has the rights to make withdrawals (if allowed by contract), to surrender or change the designated beneficiary or other terms of the contract.
10. Annuity Payment Period
    • The period of time where the customer receives payments or income from the annuity.
11. Annuity Provider
    • The party that has the continuing periodic payment obligation to the payee under a structured settlement agreement or a qualified assignment agreement. Often an insurance company.
12. Annuity Start Date
    • The date when annuity payments to begin.
13. Assignment (of Policy)
    • The legal transfer of one person's interest in an annuity to another.
14. Beneficiary
    • The person who receives the benefit when the insured or annuitant dies.
15. Best Interest Standard
    • Internal Revenue Code Sec. 5891 and most state laws require that a court find that a proposed settlement factoring transaction, or the sale of structured settlement payments, be in the best interest of the seller, taking into account the welfare and support of any dependents. The court approval process is designed to ensure this standard.
16. Cash Quote
    • Cash Quote represents the amount of money to be received now in return for the transfer of future structured settlement payments. This is the net purchase or net advance amount.
17. Client First Consultation
    • A free interview between a structured settlement annuitant and our company to discuss options to purchase your future structured settlement payments. This is often the first step to getting a cash quote, or net advance amount.
18. Court Order
    • A legally binding ruling issued by a judge or other court officer. The sale of the cash flows or periodic payments from a structured settlement typically require a court order.
19. Debt Management Agency
    • A Debt Management Agency is a consumer credit counseling agency that provides credit counseling, financial literacy education, and debt management plans (DMPs) to consumers in debt who qualify for creditor services.
20. Dependents
    • Includes all persons for whom the payee is legally obligated to provide support, including maintenance. A person dependent or reliant upon another individual, typically children, stepchildren, and children for whom the contributor is the legal guardian under the age of twenty years.
21. Discount Rate
    • The interest rate used to compute the present value of future cash flows.
22. Discounted Present Value
    • The net present value of future payments, this is determined by discounting (or reducing) the future payments to the present. The basis of the discounted value is the most recently published Applicable Federal Rate for determining the present value of an annuity, as issued by the United States Internal Revenue Service, as well as the rate applied by the party purchasing the settlement payments.
23. Divorce Decree
    • A divorce decree is a ruling that summarizes the rights and responsibilities of divorced parties. It's a document that states the basic information regarding the divorce.
24. Estate
    • An arrangement typically holding money or documents by a trusted party until certain agreed conditions are met.
25. Estate Planning
    • Preparing for the orderly administration, management and distribution of a person's assets and liabilities during one's lifetime and upon death. This can include a will, trusts, and insurance.
26. Estate Taxes
    • A tax assessed on the transfer of a deceased's asset to his or her heirs.
27. Face Amount or Face Value
    • The amount that will be paid in case of death (life insurance) or at maturity (bond or other investment).
28. Factoring Transaction
    • Describes the selling of future structured settlement payments (or, more accurately, rights to receive the future structured settlement payments). The transaction is also referred to as a “sale of structured settlement”.
29. Federal Tax Liens
    • A claim against property for the amount of the owner's tax obligations owed to the federal government.
30. Financial Affidavit
    • A sworn statement of income, expenses, assets and debts liabilities. In some cases, this may be referred to as a statement of financial condition.
31. Fixed Annuity
    • An annuity in which the insurance company invests the assets on behalf of the contract holder and pays a fixed rate of interest.
32. Full Purchase
    • When a client sells their entire annuity or structured settlement.
33. Funds Transfer
    • Money that is withdrawn from one account and placed into a different account.
34. Gift Tax
    • Tax imposed by federal or state government on an asset transferred as a gift to individuals.
35. Gross Advance Amount
    • The sum payable to the payee in return for a transfer of structured settlement payment rights before any reductions for transfer expenses, court costs, or other deductions to be made from such consideration.
36. Gross Purchase Price
    • The sum payable to the payee in return for a transfer of structured settlement payment rights before any reductions for transfer expenses, court costs, or other deductions to be made from such consideration.
37. Guaranteed Payments
    • Payments made regardless of whether the annuitant is living or deceased.
38. Guardian
    • A person who has the power and duty to take to manage the property and rights of another person, often on behalf of a minor or other party considered unable of taking care of his or her own affairs.
39. Immediate Annuity
    • An annuity in which the annuity payout period begins immediately, typically within one year of the purchase date.
40. Independent Professional Advice
    • The advice of an attorney, certified public accountant, actuary, or other licensed professional adviser regarding the value of an annuity.
41. Inflation
    • The steady rise of payments over time, used to calculate the discount rate which determines the value today of your structured settlement payments paid in the future.
42. Insurance Settlement
    • The payment of proceeds by an insurance company to the insured to settle a claim within the guidelines of the insurance policy.
43. Insured
    • The person who is insured under a policy.
44. Insurer
    • Party that provides insurance coverage typically through a contract between insurance entity and customer.
45. Interested Parties
    • Any party that has continuing rights or obligations with respect to any structured settlement, including the payee, the structured settlement obligor, any beneficiary to the annuity contract or any other party that has continuing rights or obligations under such structured settlement.
46. Joint Annuitants
    • Two or more recipients of the same benefit payment or a joint survivor option.
47. Legal Representative
    • A person acting for and legally authorized to execute a contract for an individual, typically used for minor children.
48. Life Contingent Payments
    • An annuity income option where payments are received for the duration of a person's life, but end upon death.
49. Life Expectancy
    • The number of years a person is expected to live based on a number of factors. This calculation is a key component of the determination of insurance costs and potential coverage.
50. Lifetime Payments
    • An annuity income option that makes monthly payments for the remainder of the annuitant's life, regardless of the length of time.
51. Liquidity
    • An amount of money or cash, or the ability to have immediate access to money.
52. Lump Sum Annuity
    • An annuity designed to make a single payment on a specified future date or series of lump sum payments on specified future dates.
53. Lump Sum Payment
    • A sum of money paid in a single installment rather than paid over time.
54. Net Advance Amount
    • The amount payable to an individual in return for a transfer of structured settlement payment rights, after any reductions for transfer expenses or other deductions to be made.
55. Net Present Value
    • The amount of cash today that is the equivalent in value to cash to be received in the future based on a specific discount rate. The net present value is typically lower than the same cash paid over time due to inflation and other factors.
56. Net Purchase Amount
    • The amount payable to an individual in return for a transfer of structured settlement payment rights, after any reductions for transfer expenses or other deductions to be made.
57. Not-For-Profit
    • A Not-for-Profit credit counseling agency is exempt from federal income tax under section 501 (c) (3) of the Internal Revenue Code.
58. Notarize
    • The act of an individual witnessing a person signing a document, and attesting to the identity of the individual. Many legal documents require a notarized signature, including agreements to transfer structured settlement rights.
59. Partial Purchase
    • When an individual sells only a portion of their structured settlement or annuity while retaining rights to the remaining unsold portion. This could also be referred to as a partial settlement.
60. Payee
    • The party to whom money is paid. Usually the payee is the person who the annuity issuer makes annuity payments to. In the case of a structured settlement, this is the consumer who is receiving tax-free payments under a structured settlement and proposes to make a transfer of payment rights.
61. Payment Stream
    • Payments received periodically from a structured settlement or an annuity.
62. Period Certain Payments
    • Also referred to as the guaranteed payment period. This is the period that structured settlement or annuity payments will be paid whether or not the annuitant dies prior to the completion of the period.
63. Periodic Payments
    • Payments that are paid or received regularly, typically on a monthly or quarterly basis. Includes both recurring payments and scheduled future lump sum payments.
64. Personal Injury
    • An injury to a person, typically as the result of an accident. Often, personal injury claims are settled with structured settlements.
65. Plaintiff
    • The party in a civil or criminal case who files a claim against a defendant in court.
66. Premium Payments
    • The periodic payment required to maintain or keep a life insurance policy in force.
67. Present Value
    • The current worth or value of an amount to be received in the future. In the case of an annuity or structured settlement, the present value is the current value (today) of a series of payments to be made in the future. (see net present value) The present value is less than the series of payments made over time due to the "time value of money."
68. Purchase Price
    • This is the amount that a buyer or purchaser is offering to pay for a certain asset. In the case of a structured settlement, this is the amount that a company may pay for the future payment obligations owned by the seller or customer.
69. Qualified Assignment
    • A qualified assignment is an assignment of the obligation to make future settlement payments which satisfies the requirements of Internal Revenue Code section 130 for tax free treatment of structured settlement payments.
70. Responsible Administrative Authority
    • With respect to a structured settlement, any government authority vested by law with exclusive jurisdiction over the settled claim resolved by such structured settlement. Typically this is a local court.
71. Separation Agreement
    • A contract typically between a husband and wife, signed when a legal separation has been granted or agreed to, typically associated with a divorce. The agreement is designed to settle any financial as well as any child support issues that may exist.
72. Settled claim
    • The original tort or legal claim resolved by a structured settlement.
73. Settlement Agreement
    • The arrangement made between an insurer and a policy owner (or beneficiary) concerning the manner in which the insurer will pay the policy proceeds to the beneficiary.
74. Settlement Date
    • The date agreed on for transferring funds to complete a transaction. For structured settlements, this is typically a date AFTER the court order or qualified assignment is approved by the court, and is the date that the customer receives the lump sum payment.
75. Settlement Paperwork
    • The agreement which provides the terms of a structured settlement, including the rights of the payee to receive periodic payments, as the amount of the payments over time.
76. Special Power of Attorney
    • Gives another person legal authority to act on your behalf under specific circumstances.
77. State Tax Lien
    • A claim against an individual, often secured by an asset, for the amount of the owner's unpaid state taxes.
78. State Tax Lien
    • A claim against an individual, often secured by an asset, for the amount of the owner's unpaid state taxes.
79. Stipulation
    • An agreement or concession made by parties in a court proceeding relating to the business before the court.
80. Stream of Payments
    • Payments received periodically, typically from a structured settlement or an annuity.
81. Structured Settlement
    • Settlement of a claim or lawsuit by means of periodic payments paid over time.
82. Structured Settlement Agreement
    • The agreement which provides the terms of a structured settlement, including the rights of the payee to receive periodic payments, as the amount of the payments over time.
83. Structured Settlement Obligor
    • The party that has the continuing periodic payment obligation to the payee under a structured settlement agreement or a qualified assignment agreement. Often an insurance company or annuity provider.
84. Structured Settlement Payments
    • Payments received from a structured settlement or an annuity, including periodic payments and payments received as lump sums at future dates.
85. Surrender Charges
    • Penalties assessed for withdrawals made in excess of the allowable amounts during certain periods of a contract.
86. Surrender Schedule
    • The number of years and percentage amount of surrender charges applied to withdrawals from an annuity contract or life insurance policy.
87. Tax Deduction
    • An expense allowed by the Internal Revenue Service which is deducted from income to establish taxable income.
88. Tax Deferral
    • A postponement of current income taxes until a later date.
89. Tax-Deferred Interest
    • Interest that is not currently subject to income taxation.
90. Term Life Insurance
    • An insurance policy in effect for a specific period of time.
91. Term of Policy
    • Period for which the policy runs. For term insurance, this is the length of time the death-benefit protection is available.
92. Terms of the Structured Settlement
    • Includes, with respect to any structured settlement, the terms of the structured settlement agreement, the annuity contract, any qualified assignment agreement and any order or approval of any court authorizing or approving such structured settlement.
93. Time Value of Money
    • Financial concept that explains the reality that money received over time is worth less than if it was received in the past, or that money received in the future is worth less when received today. This is basically due to inflation or the rising costs of goods over time.
94. Tort
    • A body of law which permits an injured person to recover compensation from another party. When one person injures another, either intentionally or by negligence, a court may award money damages to the injured party. These can sometimes be paid in the form of a structured settlement.
95. Transfer Expenses
    • All expenses of a transfer that are required under the agreement to be paid by the payee or deducted from the gross advance amount, including court filing fees, attorneys fees, escrow fees, lien recordation fees, judgment and lien search fees, commissions, and other payments to a broker or other intermediary.
96. Transferee
    • The party acquiring or proposing to acquire structured settlement payment rights through a transfer.
97. Underwriter
    • The insurance company receiving premiums and accepting responsibility for fulfilling the policy contract.
98. Universal Life Insurance
    • A life insurance policy that combines term insurance with additional investments.
99. Variable Annuity
    • The combination of an annuity contract with an additional investment.
100. Variable Life Insurance
     • This type of life insurance lets individuals invest their cash reserves in other investment options, such as stock and bonds, which may different and fluctuating rates of return.
101. W-9 Form
     • A tax form for the United States which certifies an individual's taxpayer identification number.
102. Workers Compensation
     • Compensation that covers the medical expenses and lost income of employees if they are hurt in the course of doing work-related activities.
103. Wrongful Death
     • When a person's death is caused by the negligent or intentional act of another.
104. Your Best Interest
     • Concept that provides protection for consumers to ensure that receipt of money today in return for the right to future structured payments is beneficial to the consumer. This considers the present value of the future payments, as well as the needs of the consumer today to receive the lump sum cash.

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