by Structured Settlement Watchdog
There is a general prohibition on advertising statutory protections in connection with the sale of insurance, including annuities [ see NOLHGA Advertising Prohibition].
Yet as is evident by the image below, companies like Montana based Annuity Straight Talk speak about state guaranty funds in a manner that would appear to be never intended by state insurance law to in a sales pitch to promote the "safety factors" of what Annuity Straight Talk refers to as "secondary market annuities". The only defense of this usage is to say that they are not annuities. If that defense strategy were to be deployed, is that an admission to false advertising, insinuating insurance protections to an instrument that is not an annuity? That not withstanding, is the statement even true? Do guaranty funds cover structured settlement derivatives? What steps have Annuity Straight Talk and others who make similar insinuations, taken to confirm the statement?
Annuity Straight Talk and others like them offer other insurance products, including annuities. You need an insurance license to offer insurance products, including annuities and its principal is a licensed insurance agent in Montana according to the company's BBB listing. The Annuity Straight Talk website solicits customers for Fixed Indexed Annuities and Hybrid annuities and suggests appointments with several major insurers such as MetLife, John Hancock, Guardian, Allstate and Prudential.
Montana Law (where Annuity Straight Talk is based)
§33-10-210. “Unfair trade practice -- notice to policy owners” (1) It is a prohibited unfair trade practice for any person to make use in any manner of the protection afforded by this part in the sale of insurance. Amended effective July 1, 2003.
Oregon Law (where several other purveyors of structured settlement derivatives marketed as "secondary market annuities" are domiciled)
Advertising Prohibition Policy
734.890 "Association not to be used in sales or solicitation" No insurer or insurance producer shall make, publish, disseminate, circulate or place before the public, or cause directly or indirectly, to be made, published, disseminated, circulated or placed before the public, in any newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio station or television station, or in any other way, any advertisement, announcement or statement which uses the existence of the Oregon Life and Health Insurance Guaranty Association for the purpose of sales, solicitation or inducement to purchase any form of insurance covered by the Oregon Life and Health Insurance Guaranty Association Act. This Section shall not apply however to the Oregon Life and Health Insurance Guaranty Association or any other entity which does not sell or solicit insurance or to public service institutional advertisements by individual insurers.
Prohibitions in advertising state guaranty associations can be found in the link at the beginning of this post.
Is There a Loophole in Need of Closing?
Market place confusion is not good for investors or consumers. Muddy waters need to be cleared. Insurance regulators need education on how the terms annuity and annuities are being used and need to respond with clear guidance.
Does this statement in some state laws on advertising prohibition get some purveyors of "secondary market annuities" off the hook? 'This Section "shall not apply however to the (State) Life and Health Insurance Guaranty Association or any other entity which does not sell or solicit insurance" '.
It seems to me if you are a licensed insurance agent or broker and you're going to call factored structured settlement payment rights (i.e. a structured settlement derivative) an annuity when it may not be, insinuate annuity protections where there may be none and market these to yield starved seniors something is dreadfully amiss.