by John Darer CLU ChFC CSSC
Way back my Northwestern Mutual general agent, Gerald N. Gilberg used to say that "you can't sell what you don't own", the rationale being that it's easier to ask for the premium on $1,000,000 of life insurance* if you own it yourself. While a certain amount of this was self serving, in it enabled Gilberg to build a significant annuity off each new recruiting class, the theory actually represented some sage advice. Yet in the structured settlement industry we can't sample any of the product we sell, OR can we?
I'd love to be a fly on the wall when a few industry old timers read this, but we CAN sample our own product through the ethical players in the secondary market. I opine that by "by doing so" you can do your part to :
- Help tort victims, annuitants and lottery winners get a much much better deal, IF the situation warrants, than they might get through the big advertisers; and
- Act as a catalyst to drive down discount rates and provide a direct threat to opportunists in the factoring industry who "lie in wait" for the unsophisticated, the ignorant, the lazy, who do not know how to shop, to apply the "bite wound" of 18% discount rates on their necks, when much better deals are available;
- Give your own retirement plans and those of attorneys you know a solid alternative;
- Help grow the market by being able to show in a tangible way that you personally have confidence in the product and/or company. If someone has concerns over the "A" rating of the company with competitive rates, would it not be a confidence builder to be able to say that you believe in the proposed company to such an extent that you own structured settlement payment rights yourself?
At this point it is generally accepted that factoring is sometimes necessary due to lack of available financing alternatives. Those who think otherwise are kidding themselves. An estimate based on JG Wentworth's 2009 bankruptcy filing, and its April 2010 securitization press release, implies that less than 5% of all structures are factored. Why not seek to help some of the less than 5%?
The trade associations' and members' primary concerns have been two things:
1. Abusive advertising
2. Abusive discount rates
As Thornton Melon (left) once said in a commencement speech "Got to look out for number 1, but don't step in number 2".
How about it? Let's help these folks to NOT STEP in "number 2"!
* in the days when $1,000,000 life insurance was considered a large number
Note Investments in structured settlement payment rights are not annuities and bear transaction risks not present in legitimate annuities. For this reason they may not be suitable for unsophisticated or inexperienced investors, including injury victims.
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