by John Darer CLU ChFC CSSC RSP
I heard today from an MGA in the structured settlement industry that Allstate Life Insurance Company has resumed sending notifications to its annuitants of their rights under the Advanced Funding Exchange Notice (AFEN). It's about time!
As I wrote last year in the blog post linked below, some Allstate Life annuitants have been victimized because a change in circumstances has necessitated that they consider selling some of their structured settlement payment rights, they have not thought to contact Allstate which could give then the AFEN discount rate and have got reamed by another factoring company that charges a higher discount rate. Unsophisticated sellers who do not think to shop are nutritous low hanging fruit for opportunists.
Allstate Advanced Funding Exchange Notifications: I Told You So November 26, 2010
Allstate's AFEN is a contract feature that permits an annuitant to commute structured settlement payment rights, when necessary, and in compliance with state law. Arguably, the ritual Jewish blessing over wine even "pays homage" to "the good hands people". To wit.. "Boray Pre Hag-AFEN", blessing the fruit of the vine instead of the fruit of the (Peach) tree.
While the AFEN rate is not the absolutely most competitive discount rate, through the AFEN, Allstate Life Insurance company (and Allstate Life Insurance Company of New York) offer what I refer to as a "pick" discount rate to its own annuitants which, if understood, and used in a "pick and roll" negotiation with competing factoring companies may result in a better discount rate (than the reasonably competitive discount rate that Allstate offers on AFEN commutations).
I ask my structured settlement industry brothers and sisters to not revisit the mistakes of the industry's past that led to the suspension of AFEN notices. Are you odd, or AFEN?
Those interested in a historical perspective on this issue should follow the above link to the post which contains links to posts dating back to 2006 on this issue.