by John Darer CLU ChFC MSSC RSP CLTC
When a structured settlement includes lifetime or life contigent payments, or the structured settlement payee is a minor, the structured settlement annuity issuer requires proof of birth.
Why is proof of birth necessary when a structured settlement is established?
- Lifetime payments and life contingent payments represent an increased risk for an insurance company because they they must first estimate how long an annuitant will live and must maintain adequate reserves. The insurers set the price of the life contingent structured settlement annuity based on a confluence of factors that include normal life expectancy and possibly medical records which might result in a rated age. It is essential that the date of birth for the measuring life be correct. The measuring life is the life of the person on whose life the annuity will be contingent. The measuring life differ from the payee in some cases. For example if the structured settlement payments are feeding into a special needs trust
- Some people lie about their age on insurance applications. Sad but true.
- Structured settlement payments to minor's generally do not begin until the minor reaches the age of majority. The annuity issuer and the parties should be sure when the deal is consummated when the age of majority really is.
What proof of birth is acceptable?
Proof of birth can generally be copy of an active drivers license, copy of birth certificate, active passport or other government issued identification.