by Structured Settlement Watchdog
The legitimacy of using the term “annuity” to describe factored structured settlement payment rights has been questioned for more than a decade. Surprisingly, one company made a genuine effort to present the situation truthfully.
Here is an excerpt from an ad from a tertiary marketer in 2009. The 2008-2009 financial crisis stifled institutional financing to the structured settlement secondary market and this “liquidity crisis”, led to some transferees in the secondary market seeking funding from individuals, such as Mom & Pops retirees or near retirees.
- “For a limited time, there is a finite supply available to the retail marketplace.
- Compared with other products these In-Force Annuities are created as a result of specific court orders.
- Ownership of the annuity payment(s) provides a superior income stream that is extremely secure.
- Since this is not an insurance transaction it does not require an insurance license or any other license.
- The reason for this because it is factoring which is a sale of receivables.
- The player included a link from The Cornell School of Law and Wikipedia for an interesting historical perspective of factoring and Internal Revenue Code 5891. The link for that is here: https://en.wikipedia.org/wiki/Structured_settlement_factoring_transaction
If you go to Google and type in factor transactions you will get more pages than you care to read” they said.
Factoring in Darwin and “Aunt Merriam”
Anthropologically speaking one can observe the semantics of some comparing a sap sucker with its Latin name in their defense of their usage of annuity, while others attempt to justify it by citing Aunt Merriam Webster, who is never lost for words, to describe and market the structured settlemen receivables.