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Protection
There are three guarantors of a structured annuity contract.
Life Company – issues the periodic
payment stream for the duration of the contract. We use only
life companies that have an asset base no less than $15 billion
and a surplus of no less than $5 billion for safety and security
reasons.
Casualty Company – is named as the
owner of the annuity contract for the duration of its payment
stream and therefore remains liable to the extent of the payment
period.
CompCorp – is the equivalent to the
CDIC for the banks of Canada. The Canadian Life and Health
Insurance Compensation Corporation pays up to $2,000 per month.
To provide protection to the plaintiff in the event that the
property and casualty insurer becomes insolvent, the annuity
is not only written with an irrevocable payment direction,
but it is written in such a way that it is non-assignable,
non-commutable and non-transferable. This means that the insurer
owns an annuity which cannot be changed and from which all
payments are irrevocably directed to the plaintiff.
From the plaintiff’s perspective, the annuity contains
three tiers of protection. The plaintiff has the covenant
of the life insurance company to make the payments on the
first level. Secondly, there is the CompCorp coverage up to
$2,000 per month. The Canadian Life and Health Insurance Corporation,
an industry solvency fund, is the equivalent of the CDIC for
the banks. Finally, there is the ongoing obligation of the
property and casualty insurer to make the periodic payments.
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