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What is an Annuity? An annuity is the funding vehicle for the structured settlement. The defendant1s insurance company purchases the annuity, and the funds from the annuity are used to pay the claimant according to the terms of the settlement.

Annuitant: The measuring life or person who will receive the benefit of the annuity.

Beneficiary: Person or persons designated to receive benefits that are guaranteed if the measuring life is not alive on the due date.

Annuity: An annuity based on a measuring life indicating some reduction in normal life expectancy because of a medical condition.

Life Only Annuity: An annuity that pays only for as long as the measuring life lives.

Period Certain: The minimum number of years the annuity will pay – referred to as cc. (Example — $1,000 per month, life 20cc – annuity will pay $1,000 for as long as the measuring life lives, but in no event less than 20 years)

Annuity Certain: An annuity that pays only for a specific period of time. (Example — $1,000 per month for 20 years)

Increasing Payment Annuity: An annuity that increases periodically. (Example — $1,000 per month, life, 20cc, compounded annually at 3% — 1st year payments = $1,000 per month — 2nd year payments = $1,030 per month — 3rd year payments = $1,060.90 per month etc.)

Education Fund Annuity: Deferring payments for minors until they reach college age. (Example — $10,000 payable at ages 18, 19, 20 and 21) A provision may be inserted that provides for monthly payments.

Retirement Annuity/Estate Fund Annuity: An annuity that provides for a lump-sum payment only, usually at 60, 62, or 65.

Installment Refund or Reversionary Annuity: One which guarantees the return of the purchase price of the annuity on an installment basis, usually to the purchaser if the annuitant dies within a specific period of time, usually 10 years.

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