Sell Structured Settlement Financial Considerations 2

Question 1

Which factor does NOT typically affect the lump-sum amount a payee receives for their structured settlement?

Accepted Answer

The original defendant's name

Answer

The remaining term of the payments

Answer

The dollar amount and frequency of payments

Answer

Current market interest rates

Question 2

How does the remaining term of payments affect the lump-sum offer from a factoring company?

Accepted Answer

Longer remaining terms result in greater discounting because payments further in the future are worth less today

Answer

Longer remaining terms always result in higher offers

Answer

Remaining term has no effect on the offer

Answer

Shorter remaining terms always result in lower offers

Question 3

What is 'structured settlement funding' sometimes used for by investors?

Accepted Answer

Purchasing pools of structured settlement payment rights as an asset class

Answer

Funding class-action lawsuits

Answer

Issuing new annuity products

Answer

Paying court filing fees on behalf of payees

Question 4

Why might a payee with life-contingent payments receive a lower offer than one with guaranteed payments?

Accepted Answer

Life-contingent payments carry mortality risk — they end if the payee dies, making them less certain for the buyer

Answer

Life-contingent payments are worth more to investors

Answer

Guaranteed payments are taxable, reducing their value

Answer

There is no difference in valuation between the two types

Question 5

What is a 'structured settlement annuity secondary market'?

Accepted Answer

The market in which factoring companies and investors trade previously issued structured settlement payment rights

Answer

The original market where annuities are first sold to defendants

Answer

A stock exchange for annuity products

Answer

A government marketplace for structured settlement transfers

Question 6

If market interest rates rise significantly, how does this generally affect lump-sum offers for structured settlement payments?

Accepted Answer

Offers decrease because higher discount rates lower the present value calculations

Answer

Offers increase because future payments become more valuable

Answer

Offers are unaffected by market interest rates

Answer

Offers increase to attract more sellers