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July 18, 2010

The Hartford's Unintended Legacy to Inattentive Structured Settlements Consultants

There are a number of structured settlement consulting firms and settlements groups who continue to use outdated marketing materials originally prepared by The Hartford in 1999 on their websites.  The Hartford exited structured settlement underwriting almost a year ago.  Yet settlement consultants too busy or lazy to pay attention to what they put out on their websites maintain (for example) that the FDIC only insure CD deposits up to $100,000.

Those who stay on top of what has been going on in the financial world in the last few years know that the FDIC limits were increased to $250,000 during the 2008-2009 financial crisis.

The same outdated marketing piece also states that structured settlements are TAX-FREE without delineating income tax free or estate tax free.  Structured settlement payments are not estate tax free. Secondary market structured settlement payments are not income tax free. Someone should be paying more attention to what is happening in Washington with respect to the estate tax. Structured settlement consultants who fail to qualify the tax treatment with the word "income" in their advertising, including websites, are misrepresenting the true facts and simply indicating that they are not on top of their game.

Finally one of the settlement groups run by a group of lawyers, in an analysis of structured settlements vs Bank trusts suggests that the FDIC insures treasury bonds.  According to the FDIC website:

"The Federal Deposit Insurance Corporation (FDIC) is an independent agency created by the Congress to maintain stability and public confidence in the nation's financial system by:

  • insuring deposits,
  • examining and supervising financial institutions for safety and soundness and consumer protection, and
  • managing receiverships".
A Treasury bond is not a deposit, it is a security. Specifically it is government debt issued by the United States Department of the Treasury through the Bureau of Public Debt.

Treasury Bonds are backed by the full faith and credit of the United States government. On the other hand FDIC insurance does not imply that deposits are guaranteed by the full faith and credit of the United States government.

Those who continue to use material prepared by The Hartford 11 Years ago are doing a disservice to the structured settlement industry. Structured settlement consultants should be promoting literacy not illiteracy, in my opinion.

Previous related posts:

Eight Structured Settlement Consultants Explain It "Like Its 1999"  July 17, 2009

Four More Years! Temporary FDIC Limits Extended! FDIC Can Borrow 3X More  May 21, 2009

Is the FDIC Really Backed By The Government?  April 12, 2009

Posted at 08:15 AM in FDIC Insurance, Structured Settlement Broker Business Practices |

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