Glossary of Terms

  • Annuitant:  the individual on whose life the annuity is purchased.  Also known as the claimant, plaintiff, measuring life, employee, releasor, injured party.
  • Annuity:  a contract issued by a life insurance company funding the fixed, periodic payments an individual will receive for a lifetime or a certain period of time.
  • Assignee:  the third-party company, usually affiliated with a life insurance company that accepts assignment from the defendant or its liability insurer of the obligation to make the periodic payments outlined in the settlement and acts as owner of the annuity contract, in accordance with Section 130(c). Also called “Assignment Company”.
  • Assignment Agreement:  a legal document which transfers the obligation to make the periodic payments from the defendant’s liability insurance carrier or self-insured defendant (assignor) to a third party (assignee).  The most commonly used and/or accepted are the Uniform Qualified Assignment (UQA) and Non-Qualified Assignment Agreement and Release (NQAR).
  • Assignor:  the defendant or liability insurance carrier which is originally responsible for the periodic payments under the settlement agreement, that assigns the obligation to make those payments to the Assignee.
  • Claim:  facts that combine to give rise to a legally enforceable right or judicial action.
  • Claimant:  a person with a claim in a lawsuit. Also called plaintiff, employee, releasee.
  • Claims adjuster:  the individual who works for the defendant’s liability insurance company, a risk management pool, an “adjusting company,” or for the defendant itself and works with defense counsel to settle the claim. 
  • Constructive Receipt/Economic Benefit Doctrine:  income not in the taxpayer's possession but credited to his account, set apart for him or otherwise made available for him to draw upon. For example, if the plaintiff attorney has the settlement proceeds in his/her IOLTA account, the plaintiff is in constructive receipt of the settlement.
  • Defendant:  a person or entity being sued or against whom a claim is made. Also called respondent, insured or employer.
  • Defense Attorney:  the attorney who represents the defendant/employer/respondent and insurance carrier. 
  • Guardian:  a guardian of the person is responsible for the personal welfare of the individual.  This can include the person’s 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.
  • Insurance Carrier:  a company that provides insurance on behalf of the defendant. Also called, casualty company, excess carrier.
  • Life only annuity:  an annuity that pays for the life of the annuitant only. Payments cease at death of the annuitant.
  • Life annuity, with period certain: 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:  the person who initiates a lawsuit against a person or entity. Also called annuitant, claimant, employee.
  • Plaintiff Attorney:  the attorney who represents the plaintiff/claimant during a legal settlement.
  • Periodic Payment Act of  1982:  brought various tax rulings into statutory certainty and added Section 130 to the Internal Revenue Code, thus authorizing qualified assignments. Also known as Public Law 97-473.
  • Physical Injury:  an injury to a person's physical body, ie: loss of limb, brain damage, dog bite, bruising.  These types of cases can be assigned under Section 130 and fall under Section 104(a) of the Tax Code.
  • Quote:  a written proposal showing a specific benefit type, amount, cost, expiration date and underwriting company. Also called proposal.
  • Section 104(a)(1):  section of the U.S. Tax Code which describes amounts received under Workersʼ Compensation acts as compensation for personal injuries or sickness suffered in the workplace. 
  • Section 104(a)(2):  section of the U.S. Tax Code which describes the amount of any damages (other than punitive damages) received on account of personal physical injuries or physical sickness. 
  • Section 130(c):  the Internal Revenue Code that describes and allows for the assignment of periodic payments to a third-party assignee. 
  • Settlement Agreement and Release:  a legal document executed by all parties of a lawsuit or claim stating the terms by which the plaintiff releases the defendant and/or their insurance carrier.  The payments to be made by the defendant/insurance carrier, the purchase of the structured settlement, and consent language for the assignment may also appear within the document.
  • Structured Settlement:  a legal settlement paid out as periodic payments rather than (or in addition to) a cash lump sum, usually with certain tax advantages for the claimant/plaintiff.
  • Structured Settlement Consultant:  a person who is an expert in structured settlements. He/She is licensed to sell insurance in the states where he/she practices and is appointed by the life insurance companies to specifically sell structured settlements.
  • Term, or period, certain annuity:  an annuity that pays for a set amount of time.  Should the annuitant die before the payments are scheduled to cease, then the remaining payments will be paid to a named beneficiary or to the annuitant’s estate if no beneficiary is listed.