by John Darer
In 1999 The Hartford produced some point-of-sale pieces for appointed structured settlement annuity brokers to use to compete with alternatives to structured annuities such as bank trusts, CDs, variable annuities and US Treasuries.
The passage of time has rendered some of the key points of these 1999 comparisons inaccurate.
Examples:
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When comparing structured settlements with bank trusts and CDs the FDIC coverage is inaccurately shown as $100,000 when FDIC coverage is in fact $250,000.
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When comparing structured settlements to US Treasuries the assertion that US Treasuries do not provide a hedge against inflation. As the name suggests, Treasury Inflation-Protected Securities DO provide protection against inflation. At least that what it says on the Treasury Direct website!
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When comparing structured settlements to US Treasuries the assertion that treasuries are subject to federal taxes is somewhat inaccurate because, pursuant to IRC 130(d) United States treasury obligations ARE an alternative permissible qualified funding asset for structured settlements. When used in that context the payments are income tax exempt in the same way that payments from a structured settlement funded by an annuity are income tax exempt.
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When comparing structured settlements to United States Treasuries, fails to acknowledge the factorability of structured settlement annuities and the fact that there may be a loss if the structured settlement payment rights are sold.
At some point along the way a number of prominent structured settlement consulting firms posted these comparisons on their websites including (as of 1/2/2009):
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Structured Annuities, Inc. (includes the "thoughtful" 1999 disclaimer "since tax laws are subject to change, the brief discussion of options here cannot be considered complete or necessarily up to date. Please consult your own attorney or tax advisor for more details. 6/11/99)
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Huver & Associates, Inc.
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Legacy Settlements
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Strategic Settlements
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National Settlement Consultants
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The James Street Group
It is possible that other structured settlement firms (or settlement planning firms) are handing out the 1999 Hartford point of sale material, posting them on their websites or otherwise bastardizing them.
QUESTIONS
Isn't anyone reviewing the material on their website on a regular basis so that what is published is reliable? How about it folks? If not for yourselves, how about the industry?
In fact, isn't there a legal requirement that such comparisons (which are being used to solicit insurance products) be fair and accurate?
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