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November 19, 2013

Is The Assured Annuity™ Really an Annuity?

by John Darer CLU ChFC CSSC RSP CLTC

Genex Capital states that "The Assured Annuity™ is a contract issued by an insurance company to fund the payment of damages for personal injury over a period of time. It guarantees the annuitant a payment stream over a fixed term at a fixed rate of interest. Unless otherwise stated the Assured Annuity™ is paid regardless of whether the annuitant is alive or deceased.

These annuities are sold by the annuitants to Genex Capital at a discount in exchange for a lump sum payment. Genex Capital, in turn, offers these annuities for resale as Assured Annuities™ at a preferred fixed rate of interest and fixed term to astute buyers like you".

The Genex Capital branded website feature a picture of a family of four stating that these are "at premum rates for you and your loved ones" and that "the safe and reliable annuity option"

But the question is...

Is "The Assured Annuity™ " really an annuity?

  • is it a regulated insurance product, or a derivative of one?
  • Is it sold by a licensed insurance agent in your state?
  • Are there statutory protections that apply in the event of the insolvency of the annuity issuer?

A number of settlement purchasers, such as Genex Capital, slap on the label "annuity" to something that is legally defined as a "structured settlement payment right" under Internal Revenue Code Section 5891 (c) (2).

To wit the Code explicitly states, "The term “structured settlement payment rights” means rights to receive payments under a structured settlement".

At IRC 5891(c)(3)(A) The term “structured settlement factoring transaction” means a transfer of structured settlement payment rights (including portions of structured settlement payments) made for consideration by means of sale, assignment, pledge, or other form of encumbrance or alienation for consideration.  THIS is what Genex Capital is buying from structured settlement annuitants, not the annuity! The annuity remains undisturbed, in the ownership of the qualified assignment company even after a structured settlement transfer takes place.

An investor in structured settlement payment rights is not buying an annuity, he or she is buying the rights to receive payments from a structured settlement. That is the product being sold, regardless of the label

While Genex Capital claims a trademark in " The Assured Annuity™" there appears to be no registration or application on file with the United States Patent and Trademark Office at time of posting (USTPTO.gov). However, the 'Assured Annuity" trademark search did reveal that AIG has TWO registered trademarks that include the words "Assured Annuity"

  1. VALIC Assured Choice Annuity Registration 3722046 which was registered December 8, 2009; and
  2. AIG Assured Choice Annuity Registration Number 352281 which was registered October 21,2008

The AIG products are annuities that are sold by licensed agents and brokers.

Is there a possibility of confusion? Consider that on the Genex Capital branded website there appears a table that purports to compare an AIG/American General annuity product to what Genex Capital has labeled an annuity.

The recent secondary market revelation of the falsified court orders by a New York law firm, the notation in the amended S-1 filed by JGWPT for its Initial Public Offering, the heretofore lack of protection for investors in structured settlement payment rights of Executive Life Insurance Company of New York (ELNY)   and the topics recently raised by Robin Shapiro of Novation Capital (a former President of the National Association of Settlement Purchasers) covered in my recent post, clearly demonstrate that there are risks in buying structured settlement payment rights that do not exist when you buy an actual annuity.

Slapping on a label that is convenient for search engine optimization does not eliminate them, it draws scrutiny.

 

 

 

 

 

 

 

Posted at 11:54 AM in Genex Capital Commentary, Secondary Market Annuities | Not Annuities | Don't Be Fooled, Structured Settlement Investments, Structured Settlement Watchdog® |

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Guide to Structured Settlements 2024

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    Structured attorney fees is a financial strategy that offers a unique way to defer taxes for lawyers and law firms. Lawyers CAN structure their legal fees even if the plaintiff doesn't structure their settlement. There are multiple ways to structure your attorney fees, such as capped or uncapped index linked structured settlement annuities where payments are adjusted based on upside changes in the S&P 500 or another index, Trial Lawyers may also use a special deferred pay/deferred compensation arrangement, if market based returns returns are desired with no cap. Plan NOW for year end! Put structured attorney fee expert John Darer® on your settlement planning team in 2024.
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  • What Are Structured Settlement Annuities?
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  • History of Structured Settlements
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Qualified Settlement Funds

  • What is a Qualified Settlement Fund?
    Qualified Settlement Funds | What You Need to Know
  • Firmwide Qualified Settlement Funds Debunked
    Firmwide qualified settlement funds have been heavily promoted to trial lawyers, but have been debunked in a detailed analysis in a July 2022 legal opinion a tax partner at the law firm of Faegre Drinker Biddle & Reath, LLP. Trial lawyers and firms who have established Firmwide QSFs or coinsidering establishing a Firmwide QSF should read the analysis as part of their evaluation.

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