Glossary of Structured Settlement Terms
Action: Usually refers to legal action or filing of a lawsuit, which commences the judicial process leading either to a dismissal, award, or settlement of the action. The settlement can be in a lump sum or it can structure into payments over a period of time by a third party.
Affidavit: A written statement made under penalty of perjury, and which can follow an official settlement of claims, for example, such as in a personal injury action.
Annuity: A type of insurance payment that guarantees a settling plaintiff a certain level of income over time.
Beneficiary: In the context of annuities, it usually pertains to the individual or entity that is legally entitled to receive a monetary benefit such as a payment structure flowing from an annuity.
Bests Rating: A well recognized insurance rating system devised by A.M. Best & Company to rate an insurance companies ability to meet their claims obligations.
Excessive Commissions: Annuities can be highly profitable and sometimes brokerage commissions are excessive.
FASB: Financial Accounting Standards BoardFuture Payments: The legal right to receive future payments. The value of future payments depends on many variables including the amount and due date of the payments.
Fiduciary: One is a fiduciary to another when one is legally and ethically obligated to advance the interests of the other even before their own. This term is usually associated with the type of duty a trustee owes to a beneficiary.
Legal Lenders: The term used to describe a bank or lender who is selling an annuity or structured settlement and is usually part of an overall personal injury settlement. Another present and common use of the word includes short-term consumer lenders.
Life Annuity: A financial agreement in the form of an insurance annuity in which the beneficiary receives a schedule or series of future payments. Annuities can offer an income during retirement or can come from a structured settlement.
Loss of Consortium: A legal claim for compensatory damages that alleges the loss of a marital or family relationship, usually in the form of love, companionship, society and comfort, and which was legally shown to have been the legal cause of the loss.
Personal Injury Damages: Losses for which the law allows compensation. In personal injury cases this includes economic and non-economic damages.
Structured Factoring Company: A business that purchases from others the legal right to receive their future settlement payments.
Structured Settlement: An agreement usually secondary to personal injury settlement, wherein one party agrees to pay the other, a sum of money usually in the form of periodic payments over a predetermined period of time, as opposed to a lump sum payment. Property and casualty insurance companies often purchase life insurance products to pay the costs of such settlements.
Structured Settlement Broker:A broker assists in describing the advantages and disadvantages of certain types of annuity structures as well as the inherent risk associated with different types of insurance products.
Surety Bond: Usually issued by an insuring entity on behalf of a second party, guaranteeing the second party will legally fulfill a legal obligation to a third party.
Usury Lending: A term used to describe an illegal rate of interest on a loan.