by John Darer
On May 11, 1999 Hartford Life Insurance Company produced a series of useful brochures designed to help appointed structured settlement brokers compare structured settlement annuities to various alternatives such as Treasury Securities, Bank Trusts, CDs,, Variable Annuities and the like.
On July 17, 2009 at least eight structured settlement consultant firms are still using the Hartford Life pieces, sometimes with attribution and other times without attribution. One firm has made some modification, but the majority explain it exactly as if it was May 11, 1999.
In each of the 8 company's published comparisons with CDs, the 8 firms consistently misstate the limits of FDIC coverage as $100,000 when it is, in fact, 250,000 as we sit here today.
In each of the 8 company's published comparison's to "Treasury Securities" they flub by stating that Treasury Securities do not keep up with inflation. "TIPS" are "treasury securities"
" On May 1996, the Treasury announced its intention to offer a new type of investment date book entry security with a nominal interest rate linked to the inflation rate on prices or wages...INFLATION PROTECTION securities" Treasury Direct website news archive September 25, 1996.
Moreover , the "flubbers" are consistent in being incomplete on the tax consequences of treasuries. As IRC 130(d) clearly states obligations of the United States government are a permissible "qualified funding asset". Once again let us underscore that TIPS were available well before the date that the Hartford marketing piece (that many of these folks bastardized) existed.
In the same comparison, 7 out of 8 companies failed to recognize the secondary market for structured settlements at the same time as discussing the secondary market of treasury securities. As all of these firms should know structured settlement payment rights can be factored subject to the conditons in IRC 5891 and applicable state law. Kudos to Huver & Associates for getting this part right.
So I ask you why the 8 firms which are run by intelligent respected business people, including some of the industry's biggest producers, lawyers, former NSSTA Presidents, a text book author would still have this posted up on their websites to be used in the solicitation of insurance? What gives?
Are we talking careless?
Are we talking "slap happy"? Do they just slap something up on their website without completely reading it, or reading it once and never reading it again to check relevancy?
Or do they simply not care about promoting financial illiteracy?
Surely there is nothing to be gained by having inaccurate or false information in a comparison on one's website.