Annuity

An annuity is a stream of periodic payments (monthly, quarterly, semi-annually, annually) made by a life insurance company. Payments can be made for a specified period of time, or for a person's entire lifetime, no matter how long that is.

Assignment

Assignment occurs when the defendant or casualty insurer providing the settlement money cannot or will not own your structure. Should this happen, a separate insurer will step in to own your structure, which allows you to receive your payments tax free. This process releases the casualty insurer from the ongoing liability for the structure payments, because this liability is taken on by the new insurer. You still require the consent of the casualty insurer to have a structure.

Canada Revenue Agency ("CRA")

Formerly known as Canada Customs and Revenue Agency ("CCRA"); formerly known as Revenue Canada, Taxation.

Cohort

In statistics and demography, a cohort is a group of subjects, most often humans from a given population, defined by experiencing an event (typically birth) in a particular time span.

Deferred Annuity

An annuity which begins making payments at a fixed future date. Funds are placed with a life insurer, then held by that insurer until payments begin. Interest accumulates during this deferral, so that payments are higher than if the annuity began paying immediately. A deferred annuity is useful where money for specific requirements will be needed at a future date.

Guarantee Period

Applies to life annuities, to provide a time period during which payments will be made regardless of whether the recipient is alive or not. It is designed to provide benefits to the estate of the injured party in most cases, or to the casualty insurer in others.

Immediate Annuity

An annuity which begins to make periodic payments within one year of money being placed with a life insurer. It usually starts in 30 days and usually pays monthly.

Impairment Rating

An impairment rating is a number of years that each life insurer adds to an injured person's actual age, in order to create an artificial age for the purpose of providing structured settlement quotations based on someone's lifetime. The result is that the cost to provide a specific monthly payment for the person's lifetime is reduced. In the reverse, the monthly payment that can be generated based on a set funding amount is increased.

Indexed Payments

Payments which increase at either a fixed rate, or at a rate tied to a specific index such as the Consumer Price Index (CPI). The purpose of indexing is to provide protection against increasing costs.

Joint and Last Survivor Annuity

Payments are based on the lives of two or more people. Payments will continue as long as any one of them is alive. Once the first person dies, payments to the survivor(s) may stay at the same amount or be reduced, depending upon the terms of the contract.

Life Annuity

An annuity which pays for the lifetime of the person receiving payments. There is normally a period during which payments will be made regardless of whether the recipient is alive or not. This is called a guarantee period, and it ensures that payments will continue for some minimum length of time.

Lump-sum Payment

Single payments, at specific future dates. This feature is used to provide large sums for specific needs such as replacement of vans or electric wheelchairs. These are usually combined with periodic payments.

Non-Commutable

Canada Revenue Agency requires that a structured settlement cannot be changed or cashed in.

Temporary Life Annuity

Stops paying on the earlier of death or after a set number of years. This option may or may not contain a guarantee period.

Term Certain Annuity

Pays for a set period of time, after which payments stop. All payments are guaranteed to be made, even if the recipient dies before the end of the fixed term.

• Glossary of Terms