Glossary of Terms

Glossary of Terms

 

Accelerated Death Benefits

A benefit of some life insurance policies that provides payments to policy holders who have a long-term, catastrophic or terminal illness, while the policy holder is alive. Accelerated death benefit provisions vary from insurance policy to insurance policy and from company to company. Also know as “living benefits.”

 

Accumulated Value

The full value of the annuity contract, principal plus gain.

 

Annuitant

The individual on whose life the annuity is based and generally the person receiving or entitled to the annuity payments.

 

Annuitization

A transaction that changes an annuity from accumulation phase to payout phase. When an annuity begins to pay out periodic income payments to the payee.

 

Annuity

A contract that provides periodic payments for a specified time period, such as for a number of years or for the life of the annuitant.

 

Annuity Benefits

The guaranteed periodic payments that will be paid to the payee during the payout period.

 

Annuity Contract

The agreement between the annuity owner and the insurance company that stipulates the features of the annuity and the responsibilities of each party.

 

Annuity Issuer

The insurance company that issues the annuity.

 

Annuity Owner

The individual(s) or company that purchased the annuity. Depending on the terms of the annuity contract, the owner or owners may have the right to make withdrawals, surrender or change the designated beneficiary, or make other changes to the terms of the contract.

 

Annuity Payment Period

The period of time that the annuity payments are designated to last.

 

Annuity Start Date

The date designated for annuity payments to begin.

 

Assignment (of Policy)

The legal transfer of one person’s interest in an annuity to another.

 

Bankruptcy

A federally regulated process, whereby individuals or entities that have liabilities greater than assets, seek judicial protection from creditors.

 

Cash Surrender Value

The amount that the owner of an annuity or cash value life insurance policy is entitled to receive upon surrendering the policy to the issuing insurance company. This amount may be reduced by surrender charges or policy loans, if applicable. Also may be known as the policy’s “surrender value.”

 

Child Support

Court-ordered support paid by one spouse to the other who has custody of the children after the parents are separated, or divorced.

 

Child Support Payoff Letter

A letter identifying the amount necessary to pay off outstanding support obligations.

 

Bench Trial

A trial where the judge serves as the fact finder, rather than the jury.

 

Beneficiary

The person(s) or entity(ies) who receives the death benefit when the insured dies.

 

Court Order Attorney

The attorney that files a petition for court approval of a structured settlement payment transfer.

 

Defendant

An individual, company or institution sued in a civil case.

 

Deferred Annuity

An annuity in which periodic payments are delayed until the annuity owner elects to start receiving them.

 

Deferred Income Annuity

A type of income annuity which enables you to purchase, with after tax cash today, a defined amount of income to start at a future date. The annuitant benefits from tax deferral on the interest earned on the consideration placed in the deferred income annuity.

 

Dependents

A person dependent upon another person for care and/or financial support, including: domestic partner, natural children, stepchildren, legally adopted children and any other individual for whom a person is the legal guardian.

 

Divorce Decree

A divorce decree is a ruling that summarizes the rights and responsibilities of the divorced parties. It is a document that states the basic information regarding the divorce, case number, parties, date of divorce and terms the parties have agreed upon.

 

Escrow

An arrangement whereby a trusted, independent third party typically holds money or important documents until certain agreed conditions are met.

 

Estate Planning

Preparing for the orderly administration, management and distribution of a person’s assets and liabilities during one’s lifetime and upon death. This can include wills, trusts, and insurance policies.

 

Fixed Annuity

An annuity in which the annuity issuer makes fixed dollar payments to the annuitant or designated payee for a fixed period of time.

 

Flexible Premium Deferred Annuity

An annuity that accepts additional premium payments prior to annuitization.

 

Full Purchase

A transaction in which the customer sells their entire annuity or structured settlement payment stream.

 

Guardian

A person who has the power and duty to take care of another person and/or to manage the property and rights of another person, who is either a minor or deemed incapable of taking care of his or her personal affairs.

 

Immediate Annuity

An annuity in which the annuity payout period begins immediately or within one year of the annuity purchase date.

 

Insurer

The party that provides insurance coverage typically through a contract of insurance.

 

Interested Parties

The payee, any beneficiary designated under the annuity contract to receive payments following the payee’s death, and any other party that has continuing rights or obligations under the contract.

 

Gross Purchase Price

The sum payable to the payee or for the payee’s account as consideration for a transfer of structured settlement payment rights, before any reductions for transfer expenses or other deductions to be made from such consideration.

 

Life Expectancy

The number of years a person is expected to live based on the average of a number of factors.

 

Lump Sum / Lump Sum Payment

A sum of money paid in a single installment.

 

Lump Sum Annuity

An annuity designed to make a single payment on a specified future date or a series of lump sum payments on specified future dates.

 

Net Death Benefit

The benefit amount specified in an insurance policy minus any unpaid premiums, outstanding loan balances or other withdrawals that are due.

 

Life Settlement

The sale of a life insurance policy by the policy owner covering a person (the insured). It allows the seller of an unneeded or unwanted life insurance policy to obtain more funds than surrendering the policy back to the insurance company.

 

Lifetime Payments

An annuity income option that makes monthly payments of equal amounts for the remainder of the annuitant’s life, regardless of the length of time.

 

Net Purchase Price

The sum payable to the payee or for the payee’s account as consideration for a transfer of structured settlement payment rights after any reductions for transfer expenses or other deductions to be made from such consideration.

 

Partial Purchase

When a customer sells only a portion of their structured settlement or annuity payment stream.

 

Payee

The person to whom the annuity issuer makes annuity payments.

 

Payment Stream

Payments received periodically from a structured settlement, annuity or lottery winnings.

 

Period Certain Payments

The time period during which structured settlement or income annuity payments will be paid, whether or not the annuitant dies prior to the completion of the period.

 

Plaintiff

The aggrieved party in a civil case.

 

Qualified Assignment

An assignment of the obligation to make future settlement payments, which satisfies the requirements of the Internal Revenue Code for favorable tax treatment of a structured settlement. Typically, the insurance carrier for the defendant assigns its obligation to make the future payments called for in the settlement agreement to an assignee, which then takes on such obligations, often through the purchase of an annuity.

 

Structured Settlement Agreement

The agreement, judgment, stipulation or release embodying the terms of a structured settlement, including the right of the payee to receive periodic payments.

 

Settlement Agreement

An agreement between two parties to actual or potential litigation, under which the parties agree to a resolution of the dispute.

 

Non-Qualified Annuity

An annuity contract you buy individually, rather than as part of an employer-sponsored qualified retirement plan. The premium is paid with after-tax dollars.

 

Tort

A body of the law which permits an injured person to recover compensation from the injuring party. When one person injures another, either intentionally or by negligence, a court may award money damages to the injured party.

 

Variable Annuity

A type of annuity where payments to the annuitant vary according to the changing value of the underlying investment.

 

Workers Compensation

A type of compensation that covers the medical expenses and lost income of employees if they are hurt in the course of their employment.

 

Payout Phase

The phase of an annuity during which periodic payments are made to the payee.

 

Bankruptcy – Chapter 13

A type of bankruptcy in which an individual keeps some of his or her assets and pays creditors according to an approved plan.

 

Bankruptcy – Chapter 7

A type of bankruptcy in which an individual’s debt is eliminated, but his or her assets are liquidated to repay creditors.

 

Cash Value

The cash amount payable to a life insurance policy owner in the event of termination or cancellation of the policy before its maturity or the insured event.

 

Court Order

A legally binding ruling issued by a judge or properly empowered administrative officer.

 

Death Benefit

The amount to be paid out to the beneficiary(ies) when the person insured under the policy dies.

 

Deduction

An expense allowed by the Internal Revenue Service. This is deducted from income to establish taxable income.

 

Discount Rate

The interest rate used to compute the present value of future cash flows.

 

Discounted Present Value

The net present value of future payments, this is determined by discounting the future payments to the present.

 

Estate

A person’s property (including money), entitlements and obligations. It is often used in the context of will and probate. It may also be used in reference to real estate or in a bankruptcy.

 

Estate Taxes

A progressive tax assessed on the transfer of a deceased’s asset to his or her heirs.

 

Face Amount

The amount that will be paid in case of death (life insurance) or at maturity (bond or other investment).

 

Federal Tax Liens

A claim against property for the amount of the owner’s tax obligations owed to the federal government.

 

Financial Affidavit

A sworn statement of income, expenses, property (assets) and debts (liabilities).

 

Funds Transfer

Money that is withdrawn from one account and placed into a different account.

 

Gift Tax

Tax imposed by federal or state government on an asset transferred as a gift to individuals.

 

Guaranteed Payments

Payments made regardless of whether the annuitant is living or deceased.

 

Insurance Settlement

The payment of proceeds by an insurance company to the insured to settle an insurance claim within the guidelines stipulated in the insurance policy.

 

Insured

The person who is insured under the policy.

 

Joint Annuitants

Two or more recipients of the same monthly benefit payment or a joint and survivor option.

 

Key Employee/Key Man Insurance

Protection of a business against financial loss caused by the death or disability of a vital member of the company, usually individuals possessing special managerial or technical skill or expertise. Also called key executive insurance.

 

Lapse

The termination of an insurance policy when an individual fails to pay his or her premiums on time. If you allow a policy to lapse, you typically cannot collect any cash surrender value that would otherwise be available.

 

Legal Representative

A person acting for and legally authorized to execute a contract for an individual

 

Liquidity

The ability to have ready access to invested money.

 

Net Present Value

The amount of cash today that is the equivalent in value to cash to be received in the future based on a specific discount rate.

 

Net Value

The value of an estate after all debts have been paid.

 

Notarize

The act of a notary witnessing a person signing a document. Many legal documents require a notarized signature.

 

Periodic Payments

Payments that are paid or received regularly, typically on a monthly or quarterly basis.

 

Personal Injury

An injury to a person’s body or mind, as the result of an accident.

 

Premiums

The periodic payment required to keep a life insurance policy in force.

 

Premiums Tax

A tax assessed by certain states on the premiums paid into an annuity investment.

 

Present Value

The current worth of an amount to be received in the future. In the case of an annuity, present value is the current worth of a series of equal payments to be made in the future.

 

Purchase Price

This is the amount that the purchaser is offering to pay for the asset.

 

Quote

A stated price for assets or services.

 

Responsible Administrative Authority

With respect to a structured settlement, any governmental authority vested by law with exclusive jurisdiction over the settled claim resolved by such structured settlement.

 

Separation Agreement

A contract between a husband and a wife, signed when a legal separation has been granted or when they have agreed to live apart in contemplation of a divorce. The agreement is designed to settle any property, debt, alimony, child custody, visitation, insurance, tax, and child support issues that may lie between them.

 

Settled Claim

When the original tort claim or workers’ compensation claim is resolved by a structured settlement.

 

Special Power of Attorney

Gives another person legal authority to act on your behalf under defined circumstances.

 

Spouse

A person’s partner in marriage.

 

State Tax Lien

A claim against property for the amount of the owner’s unpaid state taxes.

 

Stipulation

An agreement or concession made by parties in a judicial proceeding (or by their attorneys) relating to the business before the court.

 

Stream of Payments

Payments received periodically from a structured settlement or an annuity.

 

Structured Settlement

Settlement of claims or lawsuits by means of periodic payments.

 

Structured Settlement Obligor

The party that has the continuing periodic payment obligation to the payee under a structured settlement agreement or a qualified assignment agreement.

 

Surrender Charges

Penalties assessed for withdrawals made in excess of the free withdrawal privilege during the surrender charge period of an annuity contract.

 

Surrender Schedule

The number of years and percentage amount of surrender charges applied to withdrawals from an annuity contract or life insurance policy.

 

Survivorship Life Insurance

A method of life insurance coverage that pays a benefit upon the death of the last surviving insured person. Also known as second-to-die or last-to-die.

 

Tax Deferral

A postponement of current income taxes until a later date.

 

Tax-Deferred Interest

Interest that is not currently subject to income taxation.

 

Term Life Insurance

An insurance policy in effect for a specific period of time.

 

Term of Policy

Period for which the policy runs. For term insurance, this is the length of time the death-benefit protection is available.

 

Terms of the Structured Settlement

Includes, with respect to any structured settlement, the terms of the structured settlement agreement, the annuity contract, any qualified assignment agreement and any order or approval of any court or responsible administrative authority or government authority authorizing or approving such structured settlement.

 

Underwriter

The insurance company receiving premiums and accepting responsibility for fulfilling the policy contract.

 

Universal Life Insurance

A life insurance policy that combines term insurance with a side investment fund.

 

Variable Life Insurance

This type of life insurance lets individuals invest their cash reserves in securities, such as stock and bond portfolios, that may offer fluctuating rates of return. J.G. Wentworth does not purchase variable insurance policies.

 

Viaticate

To sell a life insurance policy.

 

W-9 Form

A tax form for the United States which certifies an individual’s taxpayer identification number.

 

Wrongful Death

When a person’s death is caused by the negligent or intentional act of a wrongdoer.

 

 

 

 

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