by Structured Settlement Watchdog
Why do 8 structured settlement firms that are run by intelligent respected businesspeople, including some of the industry's biggest producers, lawyers, former NSSTA Presidents, continue to post an outdated comparison on their websites to be used in the solicitation of insurance? What gives?
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.
Ten Years Later...
On July 17, 2009 at least 8 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, before anyone got to "Party Zero-Zero".
In each of the 8 companies' published comparisons with CDs, the 8 firms consistently misstate the limits of FDIC coverage as $100,000 when, thanks to measures taken during the 2008-2009 financial crisis it is $250,000 as we sit here today.
Forgot to Leave the TIPS
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.
Flub a Dub Dub
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 was produced and subsequently bastardized.
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.
Let's do a better job of checking accuracy and relevancy!