State RegulationsNC specificDifficulty 1/5
A structured settlement payee sells the right to receive future structured settlement payments to a factoring company. Are these structured-settlement factored payments protected by the North Carolina Life and Health Insurance Guaranty Association?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under G.S. 58-62-21(c), structured-settlement factored payments are expressly excluded from the Association's coverage. Once a payee sells or assigns the right to receive future structured settlement payments to a factoring company, the resulting factored payments are no longer the kind of benefit the Association protects — even though direct structured settlement benefits remain protected up to $1,000,000 per payee under G.S. 58-62-21(d)(5).
Why the other options are wrong
- A) The $1,000,000 limit under G.S. 58-62-21(d)(5) protects structured settlement benefits payable to the payee; it does not extend to factored payments sold to a third party.
- B) Licensing of the factoring company is irrelevant; factored payments are excluded from coverage by statute under G.S. 58-62-21(c).
- C) The Association's coverage has express exclusions under G.S. 58-62-21(c), and structured-settlement factored payments are among them.
Memory hook
Sell the payment stream, lose the guaranty safety net.