by Structured Settlement Watchdog®
Annuity Express has copped out to use the “Secondary Market Annuity” scam label
Annuity Express, based in San Francisco CA, is justifiably proud of its principals “65 years of annuity experience” , including an MBA, a CLU , a ChFC, a Certified Financial Planner and holder of FINRA license and notably, a licensed annuity broker representing all major annuity companies. This amount of experience and credentials however do not excuse what Annuity Express is doing at time of posting.
Advertising an investment as an annuity that is not an annuity (as defined by California Law) is dishonest and inaccurate. A scam label.
What is the Law on Annuity Advertising in California?
The law says that anyone who offers to sell you an annuity must give you honest and accurate information on the terms and rules of the annuity. – Annuities, What Seniors Need Know, a publication of the California Department of Insurance p2
What is an Annuity?
The California Department of Insurance definition of annuity is:
“An annuity is a contract between you and an insurance company. You buy the annuity by making one or more premium payments to the insurance company”.
The California Department of Insurance also requires initial and ongoing annuity training. As they are holders of active California insurance licenses, I invite the principals of Annuity Express to show where the term ‘secondary market annuity ” appears in those materials.
What is a Structured Settlement Annuity?
A structured settlement annuity is a form of “qualified funding asset” described under IRC130(d) that is use to fund structured settlement obligations. A qualified funding asset is purchased by a defendant, insurer or qualified assignment company. Unless an individual is a defendant using a buy and hold strategy together with the unlikely event that a plaintiff would accept being a general creditor of an individual (as opposed to a regulated multi billion dollar insurer), an individual would neither be policyholder or owner of the structured settlement annuity.
Annuity Express has errors of fact that belie its principals stated 65 years of annuity experience
1. “Secondary market annuities are immediate annuities” “They are providing monthly or annual payments to their owners now or are scheduled to start payments at some time over the next few years“. -Annuity Express
2. Notwithstanding the fact that a secondary market annuity is not an annuity, here’s is what the United States Internal Revenue Code Says:
The term “immediate annuity” means an annuity—
(A) which is purchased with a single premium or annuity consideration,
(B) the annuity starting date (as defined in subsection (c)(4)) of which commences no later than 1 year from the date of the purchase of the annuity, and
(C) which provides for a series of substantially equal periodic payments (to be made not less frequently than annually) during the annuity period” IRC §72(u)(4)
“Immediate Annuity. You start getting income payments within a year after you buy the annuity. California Department of Insurance
Annuity Express is Clueless
I’m sorry but I just cannot stop laughing with these guys on this one. “Instead of paying a lump sum in cash to settle the law suit, a defendant in an automobile accident may accept a stream of income payments” See what is a structured settlement? for why
Annuity Express uses the “Secondary Market Annuity” scam label in comparison to legitimate annuities issued by companies it or its principals are appointed with
“These annuities are attractive because their yield is usually higher than annuities purchased directly from an insurance company.”
How many of those insurance companies have appointed Annuity Express, its principals and its agents? According to CA Insurance Department records(retrieved July 21, 2017) the following insurers have appointed one or more principals of Annuity Express:
- United States Life Insurance Company in the City of New York
- American General Life Insurance Company
- Prudential Insurance Company of America (and other Pru subsidiaries)
- New York Life Insurance Company
- United of Omaha
- Pacific Life Insurance Company
- Metropolitan Life Insurance Company
One wonders if California insurance regulators are aware of what California insurance license holders are doing? A likely defense is that Secondary market annuities are not annuities just like the structured settlement planner from Oregon did when I questioned his payment of the cost of a qualified settlement fund and the owner of “Annuity Straight Talk” who uses the secondary market annuity scam label “because its’ easier to say”.
California Truth in Advertising Law Chaper 5 17200
As used in this chapter, unfair competition shall mean and include any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising and any act prohibited by Chapter 1 (commencing with Section 17500) of Part 3 of Division 7 of the Business and Professions Code
Who can you complain to in California?
Rob Bonta (Bonta has served as California Attorney General since 2021 )
Attorney General’s Office
California Department of Justice
P.O. Box 944255
Sacramento, CA 94244-2550
916-445-9555/(800)952-5225
Protecting Consumers | State of California – Department of Justice – Office of the Attorney General
Related Reading
Statement of Statutory Accounting Principles National Association of Insurance Commissioners (NAIC)
Structured Settlements – Reporting Entity Acquires Legal Right to Receive Payments
A reporting entity that acquires (directly or indirectly) structured settlement payment
rightsFN1 through a factoring company, excluding securitizations captured in SSAP No. 43R, shall
report the acquisition as follows:
a.
Period-certain (non-life contingent) structured settlement income streams shall be
reported as other long-term invested assetsFN2, and are admitted assets if the
rights to the future payments from a structured settlement has been legally
acquired in accordance with all state and federal requirements. If the structured
settlement has not met all legal requirements, including the court-approved
transfer from the original recipient, then the reporting entity shall recognize the
appropriate excise tax obligation and the structured settlement shall be
nonadmitted.
b.
Life contingent structured settlement income streams shall be reported as other
long-term invested assets on Schedule BA and shall be nonadmitted.
(Nonadmittance is required regardless if the right to future payments has been
legally transferred.)
New Footnote 1: This guidance is specific to acquired structured settlement income
streams (legal right to receive future payments from a structured settlement) and does not
capture accounting and reporting guidance for the acquisition of any insurance product
(e.g., life settlement, annuities, etc.). EMPHASIS ADDED
New Footnote 2: Reporting entities that hold qualifying structured settlement payment
rights shall report the security on Schedule BA either as an “any other class of asset” or as
a “fixed or variable interest rate investment with underlying characteristics of other fixed
income instruments” if the structured settlement payment right qualifies for reporting within
that reporting line (e.g., NAIC designation).