Page 5 - Glossary of Terms flipbook

qualified assignment the assignment to a third party of the liability or obligation to make periodic
payments as damages on account of physical injury. IRS Section 130 deals with
the qualified assignment.

qualified funding asset any annuity or U.S. government obligation purchased in accordance with Section
130 of the Internal Revenue Code.

quote a cost given by a life insurance company for an annuitant and benefit package.

rated age the medical age decided upon by the underwriters at the life insurance company
after reviewing the medical records. Also known as a substandard age rating. A
lowered life expectancy due to injury or present physical conditions results in a
lower cost for lifetime annuities.

reinsurance company the company affiliated with the life insurance company who accepts the
obligation of making the future payments promised by the casualty company.
Claimant will still look to the casualty company for the future payments (unless
a release is included in the Reinsurance Agreement). Claimant receives an
additional layer of insurance.

reinsurance agreement a legal document in which the original casualty company/purchaser remains an
obligor (unless a release is included in the Reinsurance Agreement) and the
agreement doesn't abridge the plaintiff's rights. The assumption by the reinsurer
of the original casualty company's obligation to make periodic payments.

Revenue Ruling 79-220 a ruling based on the analysis of various sections of the IRS code concerning the
tax-free status of monies received from personal injury situations.

Section 104(a)(1) law that allows monetary amounts received under workers' compensation acts
to be excluded from gross income.

Section 104(a)(2) law that allows monetary amounts received for physical injury or sickness to be
excluded from gross income.

Section 130 a part of Public Law 97-473 which amended the Internal Revenue Code of 1954
to allow qualified assignments on cases involving physical injury or sickness. Law
allows monetary amount received by the assignee to accept the qualified
assignment to be excluded from gross income (to the extent of the cost of the
qualified funding asset).

secured creditor a claimant holding a priority interest in property owned by an obligor.

self-insured company a company who has set aside funds for their own coverage and are not insured
through a casualty company.

settled case a case in which a proposal has been accepted by all parties and an annuity will
be purchased.

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