by Structured Settlement Watchdog
Consumers and Annuitants Need Accurate Information from Fluent Settlement Consultants
In this episode of teaching the structured settlement teacher, we focus on the web site of a settlement planner in the Southeastern United States and his description of "the structured settlement process":
The settlement planner states erroneously, "Once the defendant agrees with the claimant on a stream of periodic payments designed in the best interest of the claimant, the defendant assigns its obligation for payment to a life insurance company. The life insurance company then funds the claimant’s payments through the purchase of an annuity policy which offers attractive pricing and flexibility. The Structure may also be funded through the purchase of government securities"
Comments
The Defendant assigns its obligations to the qualified assignment company ("the assignee"). The assignee then funds its obligation to make payments to the payee (examples of payee may be the claimant or a trust, the claimant's attorney or the claimant's attorney's firm) through the purchase of an annuity or alternative permissible qualified funding asset. Click How Structured Settlements Work | Structured Settlements Explained (4structures.com) for more information.
At the time of writing this author believed the only qualified assignee that is a life insurance company is the New York Life Insurance and Annuity Corporation, the assignee used with structured settlement annuities issued by New York Life insurance Company.
The settlement planner on AIG situation:
- The settlement planner's website also includes a Q&A regarding the AIG situation which is highly commendable. The Q&A however, includes erroneous information concerning prior structured annuity issuer impairments.
- The settlement planner erroneously states that Executive Life is the only company "that went into receivership".
- In addition to the 1991 Executive Life impairment, there was Confederation Life, Monarch Life (significant because bankruptcy creditors were not permitted by the Court to have priority over the structured annuity recipients).
- The settlement planner erroneously states that the Court ordered 100% payments to Executive Life annuitants, but neglects to point out that Executive Life had shortfalls that, for those structured settlement entered into in the days before qualified assignments (or simply weren't assigned), had to be made up by the Defendant or Insurer annuity owner. It wasn't pretty.
It's vital that those disseminating information in the structured settlement/settlement planning space check the facts, please!
Last updated July 10, 2023
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