Questions of an expert’s bona fides should be immediately questioned when the author of an article is attributed to "ad staff", as in advertising staff. Such a piece appeared on Best Syndication.com in an article called "Structured Settlement Defintions, Do’s and Don’ts".
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In a demonstration of the writer’s competence in circular definitions the question " What is a Structured Settlement?" is illogically answered as follows: "A Structured Settlement is a Settlement in which you receive “Structured” payments on a regular basis. "
Pairing the skills of "Illogical" and "inaccurate" the Best Syndication.com writer goes on to state that the "structured settlement process" can also be described as Annuity.
Compounding the inaccuracy the writer claims that Lottery winnings can be ripe for structured settlements. NOT as the term structured settlement is defined under the Internal Revenue Code. However lottery winners could benefit from a non qualified assignment if the contest or lottery organizer offered it as an option.
Then of course comes the sales pitch to encourage people to sell their structured settlement payments. Well it was written by "ad staff" after all!
According to Bonehead Fides "It is important also to understand how money works over periods of time. Over long periods of time the value of the dollar is likely to decrease. This means if one was to receive, for example, $1000 a month for 20 years, that $1000 dollars could only be worth $500 at the end of the term. This is one reason some people decide to sell their structured settlement for a large lump sum. OK, so let me get this straight. By their logic money is worth less so you should take deep discount off the already reduced to present value money so you can get lump sum, which while larger in a single sum than each your incremental payments, is paltry compared to the total of your future payments?.
Bonehead Fides "Another reason people decide to sell is because they would like to invest it into something that gains equity over time and actually grows in value rather than decreases."
SS4R With this logic one has to assume the seller has been informed of, understands and is willing to accept the risk that the returns are not guaranteed. Consider that for years people have been solicited to tap into their home equity to invest in the stock market. How did those who borrowed on their home equity to invest in dot coms in March 2000 fare? In those cases the cost of home equity borrowing was far less than the effective discount rate of most factoring deals
Bonehead Fides Some people want to fight the cost of inflation and take the monthly payments and re-invest. This is the wiser choice of the two most of the time.
SS4R Inflation can be a problem. But so is trading security for a deep discounted sum (see above re: the large lump sum pitch) for the chance, not the guarantee of beating inflation. The problem is that many people fritter away the money and don’t do anything about the inflation protection. Where are the statistics to back up Bonehead Fides’ assertion that "this is the wiser choice of the two most of the time"?
Defying his/her own logic Bonehead Fides states that you should seek "the help of a broker, a financial advisor and a legal professional first. By doing this, you can protect yourself from scam artist to defend yourself from transactions lacking in integrity. It is always smarter to take the safest route possible. Selling Annuity can be dangerous so it is always wise to make slow and steady steps."
SS4R Bonehead Fides circular logic is stunning.
- If it’s the supposed "wiser choice" then why would you need to protect yourself from "scam artists" and be in danger?
- With the structured annuity you have the safety of the billions of insurer assets backing the annuity as a qualified funding asset. Duh, this is is why the structured settlement payment right purchasers want them!
- Don’t you think it’s a huge reason why JG Wentworth securitizations (backed by these payment obligations) receive a "AAA" credit rating?
- If its always smarter to take the safest route possible then the safest route is the structured settlement, through a structured annuity or a Treasury Bond trust.
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