TERMINOLOGY

Annuitant refers to the person on whose life an annuity is purchased, and they may also be known by other names such as claimant, plaintiff, measuring life, employee, releasor, or injured party. An annuity is a contract issued by a life insurance company to fund fixed, periodic payments that an individual will receive either for their lifetime or for a certain period of time.

An assignee is a third-party company that accepts assignment from the defendant or its liability insurer of the obligation to make the periodic payments outlined in the settlement. They act as the owner of the annuity contract, according to Section 130(c), and may also be referred to as an "Assignment Company." An assignment agreement is a legal document that transfers the obligation to make periodic payments from the defendant's liability insurance carrier or self-insured defendant (assignor) to a third party (assignee). The most commonly used and accepted assignment agreements are the Uniform Qualified Assignment (UQA) and Non-Qualified Assignment Agreement and Release (NQAR).

Assignor refers to the defendant or liability insurance carrier that is originally responsible for the periodic payments under the settlement agreement, which they assign to the Assignee. A claim is a combination of facts that give rise to a legally enforceable right or judicial action. A claimant is a person with a claim in a lawsuit and may also be called a plaintiff, employee, or releasee.

A claims adjuster is an individual who works for the defendant's liability insurance company, a risk management pool, an "adjusting company," or for the defendant itself. They work with defense counsel to settle the claim. The constructive receipt/economic benefit doctrine refers to income that is not in the taxpayer's possession but credited to their account, set apart for them, or otherwise made available for them to draw upon. For example, if the plaintiff attorney has the settlement proceeds in their IOLTA account, the plaintiff is in constructive receipt of the settlement.

A defendant is a person or entity being sued or against whom a claim is made, and they may also be called a respondent, insured, or employer. A defense attorney is the attorney who represents the defendant/employer/respondent and insurance carrier. A guardian of the claimant is responsible for the personal welfare of the individual, which can include their living arrangements, medical care, education, and so forth. A Guardian of the Estate is responsible for the case and management of the individual's property. Under normal circumstances, parents perform these roles for their minor children in the role of "parent and natural guardian." If payments are going to be made to a parent for the benefit of a child prior to the child's 18th birthday, then the life insurance companies may require a copy of the court documents appointing a Guardian of the Estate of that child. A Guardian ad Litem is an attorney who solely represents the interest of a minor child or incompetent adult.

An insurance carrier is a company that provides insurance on behalf of the defendant and may also be called a casualty company or excess carrier. A life only annuity is an annuity that pays for the life of the annuitant only, and payments cease at death of the annuitant. A life annuity, with period certain, is a life annuity in which a certain number of payments will be paid whether or not the measuring life survives the entire payment schedule.

Plaintiff refers to the person who initiates a lawsuit against a person or entity and may also be called an annuitant, claimant, or employee. A plaintiff attorney is the attorney who represents the plaintiff/claimant during a legal settlement. The Periodic Payment Act of 1982 brought various tax rulings into statutory certainty and added Section 130 to the Internal Revenue

Structured settlements offer several advantages over lump-sum payments. Firstly, they provide a sense of security by guaranteeing a steady stream of income over the long-term. This eliminates the need to spend time and resources on investment strategies, allowing the injured party or their family to focus on recovery.

In addition to providing security, structured settlements also offer financial benefits. The federal tax code was amended to encourage the use of structured settlements, ensuring that 100 percent of each payment is exempt from federal and state income taxes.