by Structured Settlement Watchdog
How Do I Know If the Quote is Fair?
The question " how do I know if the quote to buy my structured settlement payment rights?" is fair. The Annuity.org response is intellectually dishonest in continuing to promote a range of rip off level discount rates as a benchmark for the structured settlement cash now quotes.
In typical form over substance fashion*, Annuity.org answers the question by citing a purported statistic published on the website of the National Association of Settlement Purchasers that frames a fair discount rate as a range between 9% and 18%. The intellectual dishonesty framed by Annuty.org may not be obvious to consumers, unaware that (as an example) Berkshire Hathaway annuitants can get a 6.5% discount rate. The higher the discount rates the more of a rip off it is for sellers.
Roger Proctor CEO of Genex Capital may not have been prescient about the trajectory of interest rates in 2009 when he used it in an outreach to structured settlement annuitants to sell their structured settlement payments (strenuously so a year later), he did have a simple truth to make about the effect of discount rates on present value if you have to sell.
Here's what the Proctor said on June 28, 2009:
"You may have heard in the media in recent weeks that interest rates have bottomed and are slowly creeping back up. I (Proctor)believe that this is the beginning of a new cycle of incremental increases in interest rates over the next few years. When interest rates go up, the present value of a person’s structured settlement goes down. This is a simple truth. As such, if you are considering selling your structured settlement, now is the time to get the best rate".
Annuitants shouldn't use 9%-18% as a frame of reference. The 9%-18% average benchmark cited by Annuity.org is a range that may be good for investors and securitizations but is a rip off for selling annuitants in the current environment. There are deals that happen with discount rates in the 4-6% range, depending on the type of cash flow and the source of capital for the buyers. Public court records will show that one of NASP's new members has priced some deals in the low 4% range. Note that sales of life contingent payments that are hedged with life insurance bear higher discount rates.
*To showcase purported editorial standards, Annuity.org typically credits articles as "authored, edited and financially reviewed". As I've pointed out over and over again regarding Annuity.org, the work belies the showcasing. The February 9, 2022 update is just another of many examples that I've chronicled here.
"If we knew what it was we were doing, it would not be called research, would it?" Albert Einstein
"You have to do the research. If you don't know about something, then you ask the right people who do". Spike Lee