Structured Settlement Basics Flashcards
6 cards from real Structured Settlements 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
Who typically serves as the 'qualified assignee' in a structured settlement qualified assignment?
Answer: A special-purpose assignment company affiliated with a life insurer
A qualified assignee is usually a special-purpose company set up by a life insurer to assume the payment obligation from the defendant or its insurer.
Under IRC §130, what happens when a defendant assigns its structured settlement obligation to a qualified assignee?
Answer: The defendant excludes from income any amount received for assuming the periodic payment liability
IRC §130 allows the defendant (or its insurer) to exclude from gross income amounts received from the assignment of the periodic payment obligation to a qualified assignee.
What does 'present value' mean in the context of structured settlements?
Answer: The current worth of future payments discounted at an assumed interest rate
Present value is the current dollar value of a stream of future payments, calculated by discounting them at an appropriate interest rate.
Which of the following is NOT a typical type of structured settlement payment schedule?
Answer: Declining government bond yields
Structured settlement payment schedules include level, increasing, or decreasing periodic payments and future lump sums, but bond yield curves are not a payment schedule type.
What is a 'life-contingent' structured settlement payment?
Answer: A payment that is made only if the claimant is still alive
Life-contingent payments cease upon the claimant's death, so the payment obligation is contingent on the claimant remaining alive.
What is a 'guaranteed' structured settlement payment?
Answer: A payment that will be made for a fixed number of years regardless of the claimant's survival
Guaranteed payments are made for a specified period (e.g., 20 years certain) regardless of whether the claimant is alive, often paid to a beneficiary upon the claimant's death.