Structured Settlement Basics Flashcards
6 cards from real Sell Structured Settlement practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Structured Settlement Basics flashcards as text
What term describes the entity that originally owed payments under a structured settlement?
Answer: Obligor
The obligor is the party — typically an insurance company — legally obligated to make the periodic structured settlement payments.
Which party in a structured settlement is the person entitled to receive the payments?
Answer: Payee
The payee is the individual (usually the injured plaintiff) who is entitled to receive the periodic structured settlement payments.
What does it mean when a structured settlement includes a 'life contingent' payment?
Answer: Payments continue only as long as the payee is alive
Life-contingent payments cease upon the death of the payee, meaning the stream of income is tied to the payee's survival.
A 'guaranteed' period in a structured settlement means:
Answer: A set number of payments will be made regardless of whether the payee lives or dies
A guaranteed period ensures that a specific number of payments will be made to the payee or their estate even if the payee dies before the period ends.
Which federal law specifically governs the assignment of structured settlement payment rights to a factoring company?
Answer: The Internal Revenue Code Section 5891
IRC Section 5891 imposes a 40% excise tax on factoring companies that purchase structured settlement payments without obtaining a qualifying court order.
What is the primary purpose of anti-assignment clauses found in many structured settlement agreements?
Answer: To prevent the payee from selling or transferring payment rights
Anti-assignment clauses are intended to protect the payee's long-term financial security by restricting the transfer of payment rights to third parties.