The typical structured settlement arises and is structured as: An injured party settles a tort suit with the defendant or its insurance carrier pursuant to a settlement agreement that provides that, in exchange for the claimant's securing the dismissal of the lawsuit, the defendant or more commonly its insurer agrees to make a series of periodic payments over time. The defendant ot the property or casualty insurance company, thus find itself with a long term payment obligation to the claimant. To fund this obligation, the property or casualty insurer generally takes one of two typical approaches: It either purchases an annuity from a life insurance company (an arrangement called a "buy and sold" case) or it assigns (more properly, delegates) its periodic payment obligation to a third party which in turn purchases an annuity which arrangement is called an "assigned case".
In an unassigned case, the defendant or property/casualty insurer retains the periodic payment obligation and funds it by purchasing an annuity from a life insurance company, there by offsetting its obligation with a matching asset. The payment stream purchased under the annuity matches exactly, in timing and amounts, the periodic payments agreed to in the settlement agreement. The defendant or property/casualty company owns the annuity and names the claimant as the payee under the annuity, thereby directing the annuity issuer to send payments directly to the claimant. if any of the periodic payments are life contingent (i.e., the obligation to make a payment is contingent on someone continuing to be alive), then the claimant or whoever is determined to be the measuring life is named as the annuitant or measuring life under the annuity.
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