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2011 NCOIL Model Act Required Life Insurers To Notify Policyholders About Secondary Market But Missed Opportunity to Deal With Structured Settlement Factoring

by John Darer CLU ChFC MSSC RSP CLTC

As we continue to comment on the Cordero vs Transamerica matter, it's worth revisiting some of my commentary from 2011 as yet another example of the strategic failure of state legislatures to address a reasonably forseeable problem related to structured settlement factoring when a parallel problem was being addressed with life settlements.

Who is NCOIL?

NCOIL is a legislative organization comprised principally of legislators serving on state insurance and financial institutions committees around the nation. NCOIL writes Model Laws in insurance, works to both preserve the state jurisdiction over insurance as established by the McCarran-Ferguson Act in 1945, to serve as an educational forum for public policy makers and interested parties.

Founded in 1969, NCOIL works to assert the prerogative of legislators in making state policy when it comes to insurance and educate state legislators on current and perennial insurance issues. It's tag line is Sound Public Policy in 50 States for 50 Plus Years

In 2011, the National Conference of Insurance Legislators ("NCOIL")  took a stand on strong life insurer disclosure to policyholders in its passage of a Life Insurance Consumer Disclosure Model Act. The purpose is to assure that policyholders are aware of their options, including secondary market options such as life settlements.

 “It is imperative that policyholders understand that they have alternatives to merely lapsing or surrendering their policy. The model would require a clear notice to consumers, listing eight available options, including accelerated death benefits, conversion to long-term care, and the possibility of a life settlement.”  NCOIL President Robert Damron

The NCOIL Model Act  Was Deemed Controversial According to 2010 Press Release

"The controversial model was the subject of extensive debate in 2010, including multiple Life Insurance & Financial Planning Committee hearings and conference calls and enjoyed input from a panoply of interested parties including legislators, regulators, and representatives of the American Council of Life Insurers (ACLI), Coventry, Institutional Life Markets Association (ILMA), Life Care Funding Group, Life Insurance Settlement Association (LISA), Life Settlement Institute (LSI), Mass Mutual, MetLife, and Prudential Financial". The latter two companies have subsidiaries that issued and still issue structured settlement annuities.

The 2011 model applies to policyholders over the age of 60 or terminally/chronically ill.

NCOIL's Abject Failure on Structured Settlement Disclosures

Although structured settlement annuities are a segment of the life insurance industry and while NCOIL and its members were aware of the structured settlement secondary market, it has been slow to adopt disclosure of secondary market options. 

Before, I took a break from the Society of Settlement Planners from late 2005 through early 2011, there was talk about speaking to NCOIL. I don't know whatever happened with that. What happened though is that by 2008-2009

Settlement Planners Strongly Objected to Allstate's Efforts

Allstate Life Insurance Company (and Allstate Life Insurance Company of New York), which stopped writing new structured settlement annuities in 2013, were first movers in overtly addressing the structured settlement factoring dilemma.

Pressure from a number of settlement planners and structured settlement brokers contributed to an Allstate Life Insurance Company decision to temporarily stop sending annual notices to structured settlement annuitants about its AFEN liquidity option.  The result, as I've previously written, is that a number of liquidity seeking Allstate structured settlement annuitants were hosed by effectively paying higher than necessary discount rates on structured settlement factoring transactions than they might have, had they been notified by Allstate as had been the custom and practice prior to 2007.  On several occasions I was contacted by Allstate structured settlement annuitants armed with a quote from one of the big "cash now pushers" where the effective discount rate exceeded Allstate's AFEN rate and there was no disclosure by the cash now pusher that such an option from Allstate was even available. 

A classic example of this was an outrageously unsuitable 2013 deal engineered by now defunct Client First Funding in connection with a then Wells Fargo investment adviser that was caught early enough that the Florida structured settlement transfer order could be vacated and the annuitant's cash flows from the structure were restored. The annuitant, who was unemployable single father of two dependent toddlers was receiving about $60,000 annually with a COLA for life from Allstate. The unsuitable Client First deal had a discount rate that exceeded the Allstate AFEN rate.

Was Client First Settlement Funding Show Of 8% Investment Projection to Structured Settlement Annuitant A Permissble Inducement? - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

We've observed a similar style of caper in February 2021, this time involving a New York resident, a Florida factoring company and the same Boca Raton investment adviser who was once with Wells Fargo making investment projections without taking into account taxes.  Judge in Niagara Foils Structured Settlement Factoring Last Stand, Citing Bob Dylan in Reject of Boca Broker - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

Settlement Planners Also Objected to Berkshire Hathaway's Hardship Exchange Program

NCOIL Press Release on Life Insurance Consumer Model Act  Download 11242010LifeDisclosurePR

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commutations and Structured Settlements

by John Darer® CLU ChFC MSSC RSP CLTC

A structured settlement commutation rider is a custom option for structured settlements that permits all or a portion of the present value of future structured settlement payments to be paid in a lump sum.  Typically the commutation is tied to the death of the annuitant, with the proceeds to be used, for example, to provide liquidity for the annuitant's estate, or to pay off liens with a Special Needs Trust. There are also similar riders to cover contractual contingencies such as remarriage or cessation of liability.

One of the limitations of structured settlement commutation riders is the requirement that they must be elected when the structured settlement is created on order to follow the spirit of a 1995 Private Letter Ruling that was issued to the structured settlement annuity issuer, Allstate Life Insurance Company.  The secondary market for structured settlements may be able to provide relief in those situations where there is no commutation provision in the structured settlement and there is a valid liquidity need.  Such so-called "structured settlement factoring transactions" require approval of a judge "to protect the innocent".

Allstate Life Insurance Company pioneered the use of another form of commutation, for hardship, through its Advanced Funding Exchange Notice (AFEN). AFEN was issued with every structured settlement annuity issued by Allstate Life Insurance Company, or its New York subsidiary, Allstate Life Insurance Company of New York where there was a qualified assignment. Essentially Allstate offered its structured settlement annuitants a liquidity option that is designed to comply with IRC 5891 and state structured settlement protection acts, at a discount rate that is less than typically offered by the "low hanging fruit grabbers" in the secondary market. If you must seek this form of liquidity, then shopping around is the message of the day. At the very least an annuitant can use the AFEN rate to negotiate a better deal. Bear in mind that if you are an Allstate annuitant and call a cash now pusher with a funny TV ad, they may not inform you of your rights under the Allstate contract.

Following Allstate's AFEN introduction, a number of companies quietly offered hardship commutations to their annuitants. In 2006,  Symetra, went to so far as to establish an entire subsidiary, Clearscape, to purchase structured settlement payment rights from its annuitants and ostensibly others.

Both Allstate and Symetra sent notices to their annuitants that were hugely unpopular with many structured settlement brokers who had a sour taste in their mouth from a saturation of misleading and in some cases fraudulent advertising by some secondary market companies at the time.  One factoring company blogger even got into the act, although such posts were eventually withdrawn.

In December 2006, San Francisco tax attorney Robert Wood  wrote a piece which questioned whether commutations could jeopardize the tax status of IRC 130 assignments that spooked a number of the quiet "commuters". Neither Symetra, which has the dedicated factoring subsidiary, nor Allstate, which does commutations, decided to withdraw their offerings. Allstate however, bowed to pressure of its brokers and stopped sending AFEN notices to its structured settlement annuitants.  Since then the structured settlement watchdog has received a number of phone calls from Allstate annuitants who contacted other factoring companies, were not told of their rights under AFEN and received low bids with discount rates that exceeded the AFEN rate.

I was pleased to learn last week that other structured settlement annuity issuers are exploring the introduction of hardship commutation similar to AFEN. Here! Here!

Commutation Riders Are a Way to Help Keep Factoring Companies More Honest

The best way to compete with structured settlement secondary market's "low hanging fruit grabbers", in my opinion,  is to "lower the bar" and thereby "raise the fruit".  I don't mean lower standards. I mean force the aforementioned into offering discount rates below a yardstick rate.  This won't completely eliminate the problem (because (1) there is still low hanging fruit from non shopping sellers who possess structured settlement payment rights from companies who no longer write structured settlements  (2) Factoring companies have shown the ability to deceive consuemrs by ignoring commuttaion discount rates and charging even higher rates) but I believe it will help.  Each and every company currently writing structured settlements is encouraged to come up with its own version of a hardship commutation.

 

 

 

 

 

 

Allstate Advanced Funding Exchange Notifications: I Told You So 4 1/2 Years Ago!

by John Darer® CLU ChFC CSSC RSP CLTC

Missing from the NSSTA commentary of the excellent job that New York judges are doing in enforcing the New York Structured Settlement Protection Act, in Washington Square Financial, LLC v. Allstate Assignment Co., No. 9605/2010, 29 Misc.3d 1204(A), 2010 WL 3834000 (N.Y. Sup. Ct. Oct. 1, 2010), is one of the possible reasons that deal was even brought to the table with that horrific discount rate from Washington Square Financial. This was a follow on attempted transfer. A previous request involving the same factoring company was rejected in 2009.    

Structured Settlement Brokers Pressured Allstate to Stop Sending Notices Out To Annuitants

One reason why this was even possible, in my opinion,  is the ENORMOUS pressure certain structured settlement brokers put on Allstate in 2006-2008 to stop sending notices out concerning its Advanced Funding Exchange Notice (AFEN), which Allstate eventually stopped doing in the first quarter of 2008.

Through its AFEN, Allstate Life (and its New York company) 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 competitve discount rate that Allstate offers on AFEN commutations).

Had Allstate Sent out AFEN Notice, Annuitant Might Have Had a Better Rate to Compare to Washington Square Rate and Forced the Deal Rate Down

I submit to you that IF the annuitant in the case that NSSTA is highlighting, an annuitant of Allstate Life Insurance Company of New York,  had continued to receive an annual notice of his rights under the AFEN, he never would have done business with Washington Square Financial (a name change to Imperial Structured Settlements was published in Investment Weekly News on October 11, 2008) because he would have laughed at their discount rate. Would the annuitant's deal have gone through if either the 2009 or 2010 petitions had been submitted with the AFEN discount rate?  Had the annuitant received the notices that Allstate stopped sending due to the pressure put on it by its own agents would he have been able to negotiate a better deal for himself?

I hate to say "I told you so", but I DID tell you so, starting 4 1/2 frickin' years ago.

• The Water Buffaloes or Oz  June 23, 2006
• Important Notice on the Allstate Advanced Funding Exchange Notice (AFEN)  February 22, 2008
• Allstate Structured Settlement Annuity...Why Get Shafted If You have One ?  March 3, 2009

I can appreciate that NSSTA disclosed that Allstate Life Insurance Company was an NSSTA member to disclose a bias, but how about the line "NSSTA remains profoundly concerned about some actions of companies outside this industry that encourage accident survivors to sell their future structure payment rights"?

If that is indeed the case:

1. WHY are some NSSTA member life companies not splitting payments when an annuitant only wants to sell a small amount of their payments, thus forcing the annuitant into a servicing agreement, barring contact with such annuitants as to the serviced payments and ultimately exposing their annuitants to Chapter 7 bankruptcy of the servicer? The structured settlement protection acts that NSSTA negotiated  with the factoring industry explicitly state that the insurer cannnot be forced to split payments.
2. Surely the NSSTA membership (and on a wider level the SSP members who do not have dual memberships) agree that a claimant in need, who has exhausted other options, should sell as little as possible to preserve as much long term fianncial security as they can.
3. What responsibilities do factoring companies seeking to provide liquidity to Allstate annuitants have, to disclose the existence of the AFEN?  Here is where the lack of regulation has the potential to screw the consumer.  For regulated life insurance products, state replacement statutes protect consumers from unwarranted replacement. Part of that mandatory disclosure is often a notification by the replacing agent of the features of the existing coverage. Although liquidation of structured settlement payment rights is not EXACTLY the same thing, the idea is worthwhile. If Washington Square/Imperial Structured settlements had a legal obligation to disclose the AFEN, it would have had to beat 11% to earn the business, and perhaps the judge's approval.
4. In the absence of such a law, is it unethical for Washington Square/ Imperial Structured Settlements to put forth a proposed structured settlement factoring transaction involving an Allstate annuitant with a discount rate that far exceeds 11%?
5. In the absence of such a law, is it unethical for an attorney representing Washington Square/ Imperial Structured Settlements, or any other factoring company , to put forth a proposed structured settlement factoring transaction involving an Allstate annuitant with a discount rate that exceeds 11%.
6. If one were to conduct discovery to examine ALL judicially approved (and rejected) third party structured settlement factoring transactions involving Allstate structured settlement annuitants for all the years that Allstate has been offering the AFEN, would we find a "pattern and practice" that many were submitted or concluded with discount rates that exceeded the Allstate AFEN rate?  Were disclosures about the AFEN given to the annuitants in ALL of those cases? It would be worth separating those that occurred prior to early 2008 (when Allstate stopped sending AFEN notices) and those that occurred after.

Judges, you represent the last clear chance to prevent Allstate annuitants from getting "hoodwinked" into selling their stuctured settlement payment rights for a discount rate that is greater than the Allstate AFEN rate. Please make note of the fact that ALL Allstate structured settlement annuitants have an Advanced Funding Exchange Notice. When examining the discount rate for fairness, first require that the AFEN rate be determined and verified. Then reject any case where the discount rate exceeds AFEN.

What will NSSTA and its members do to encourage Allstate to reinstate the AFEN notifications or come up with some solution so that Allstate Life annuitants are not victimized?

If you have a structured settlement with Allstate Life Insurance Company or Allstate Life Insurance Company of New York and find yourself with no other alternative to raise cash make sure you go to Allstate to get an AFEN quote.  Many cash now pushers will not even tell you about this. Don't be a victim!

 

Politics of Investing in Another Person's Structured Settlement Being Offered to Individual Investors

Opportunities to buy structured settlement payment rights on live or warehoused structured settlement factoring deals are becoming more easily accessible to individual investors.

This author has seen a term sheet in the last few days offering rates of return of between 6.5 and 7.75% to factoring investors in structured settlement payment rights backed by the paper of Genworth, Symetra, Allstate and others in exchange for making a cash payment up front. Some investors may choose to fund the original deal and then resell the structured settlement payment rights to someone else for a profit.

Some say that in some cases the net after tax rate of return of the "derivative" is better than a regular structure and that tort victims should consider this as a financial/ settlement planning option. 

Placed in a Roth IRA or retirement plan these payment rights represent attractive conservative rate of return. After all isn't that what the insurance industry and structured settlement industry is selling?

I have had the opportunity to speak with a number of reputable financial advisors who ARE already doing these deals for their clients.

Are there any ethical or regulatory considerations for settlement professionals engaging in this business as:

 (1) an investor for their own account or qualified retirement plan? 

 (2) advising their clients to do so?

Naturally one wonders how fair was the effective discount rate charged to the original selling structured settlement annuitant, or how soon after the structured created is it being factored? 

One Structured Settlement Industry Proponent Sees No Issue For the Following Reasons

(1) the broker/planner/buyer/tort victim/trust/IRA has no direct connection to the annuity placement with the original annuitant

(2) the seller/original annuitant needs liquidity and this simply is a means to provide it' and of paramount concern

 (3) the settlement planner/financial adviser or trustee, if applicable, must serve the best interests of his/her client;

(4) investing in the "derivative" underscores a belief in structured settlement annuities.

Plenty of Detractors

Another industry detractor recently stated to this author that if discovered that one of its associates invested in one of these deals they could look for another firm. Another agency manager lamented that one of his associates lost a case to this "investment" vehicle.

The irony is that this new form of "competition" exists by virtue of the ability to factor a structure as opposed to structure commutations. I'll go out on a limb to express my doubts that a company like Allstate Life Insurance Company securitizes or sells derivatives of commutations effected by virtue of its Advanced Funding Exchange Notice (AFEN) rider.

The structured settlement and settlement planning industry cannot stick their heads in the sand on this issue. It is ripe for industry wide discussion.

 

 

 

 

 

IRS PLR May Answer Question on Structured Settlement Commutations and/Or Factoring by Assignment Companies

by John Darer® CLU ChFC MSSC RSP

In issuing a Private Letter Ruling, the IRS seems to have resolved trouble about commutations that was stirred up in a Christmas past by a Dec 2006 published legal opinion that was purportedly done at the behest of the factoring industry. At that time a structured settlement commutation was offered by a number of the life insurers issuing structured settlement annuities, in a variety of forms. A number of the factoring companies were reeling when the life companies actually bettered the liquidity offers to their own annuitants, often at the last minute when the factoring companies had already front loaded expenses. As a result of the published legal opinion a number of life insurers pulled out of formal or informal commutation programs. Allstate, with its AFEN Exchange and Symetra with its own factoring company (Clearscape Funding Corporation) remained.

Symetra Assigned Benefits Service Corporation is a structured settlement assignment company.
Symetra Assigned Benefits Service Corporation also factors structured settlements through Clearscape another Symetra subsidiary.

On May 1, 2009 the IRS issued Private Letter Ruling 200918001 to Symetra, in response to a request for a ruling from Symetra as to whether payments it will make to Claimant pursuant to a structured settlement factoring transaction described in § 5891(b)(1) of the Internal Revenue Code are subject to the information reporting requirements of § 6041.

IRC 6041(a) says , with respect to payments made of $600, or more:

"All persons engaged in a trade or business and making payment in the course of such trade or business to another person, of rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable gains, profits, and income (other than payments to which section 6042 (a)(1), 6044 (a)(1), 6047 (e), 6049 (a), or 6050N (a) applies, and other than payments with respect to which a statement is required under the authority of section 6042 (a)(2), 6044 (a)(2), or 6045), of $600 or more in any taxable year, or, in the case of such payments made by the United States, the officers or employees of the United States having information as to such payments and required to make returns in regard thereto by the regulations hereinafter provided for, shall render a true and accurate return to the Secretary, under such regulations and in such form and manner and to such extent as may be prescribed by the Secretary, setting forth the amount of such gains, profits, and income, and the name and address of the recipient of such payment".

The ruling seems to put to rest the issue of whether a qualified assignment company can safely invoke IRC 5891 in commuting or factoring a portion of an annuitant's  structured settlement to reflect the changing conditions in the annuitant's life. The annuitant does not have to give up all of the rights to all of the periodic payments.

Questions

Will this ruling be notice to life companies that they can start offering reasonable commutations and restructuring?

What will be the reaction to the ruling from the factoring companies?

A copy of the IRS Private Letter Ruling can be found by clicking below

Download Symetra PLR on IRC 6041

 

Allstate Structured Settlement Annuity...Why Get Shafted if You Have One?

by John Darer® CLU ChFC MSSC CeFT ® RSP CLTC

If you have an Allstate structured settlement annuity and have liquidity needs that cannot be met from any other source, make your first call to Allstate's Advanced Funding Exchange Notice (AFEN) unit.

The Advanced Funding Exchange Notice (AFEN)  is a liquidity option riderthat may benefit Allstate structured settlement annuitants in a time of need, who are willing to comply with IRC 5891 and obtain a qualified order. With sources of funding drying up for many factoring companies , Allstate's fixed discount rate may NOW be more competitive than the discount rate offered by factoring companies and cash now pushers.  Download sample AFEN_rider

I received a call from a reader from Virginia, who was offered $36,000 for 180 monthly payments of  $750 per month, starting 3/2/2009. This equates to an effective discount rate of almost 25%, from Seneca One. Lucky for him he happened to call. Once I learned he had an Allstate structured annuity I explained to him about the Advance Funding Exchange Notice and suggested that he contact Allstate. He was both thankful for the information and puzzled as to why he hadn't heard about AFEN from anyone else. Does Seneca One have an obligation to tell him that he had the AFEN opportunity at possibly half the cost? Apparently not.

Ironically, as we previously reported, many structured settlement industry brethren have, in the past, repeatedly lambasted Allstate for notifying its annuitants about the Advanced Funding Exchange Notice that comes with every Allstate structured settlement contract. Some of the ill opined advisers even wanted Allstate thrown out of NSSTA. You all know who you are. A brief primer...

Important Update on the Allstate Advanced Funding Exchange Notice (AFEN)  2/22/2008

What do my industry brethren say now?

What responsibility do settlement planners and settlement consultants have to inform Allstate structured settlement annuitants of the Advanced Funding Exchange Notice now that they have successfully bullied Allstate into stop sending the notices?  Consider that in the instant case the Allstate annuitant was so close to being a victim of opportunistic capitalism from the Seneca One factoring company.

 

 

 

 

Insurance Commissioners! If You Can Do It For Viaticals Why Not Structured Settlements?

On June 4,2007, after what has been reported as an intense debate, the National Association of Insurance Commissioners (NAIC) adopted amendments to the Viatical Settlements Model Act at the NAIC's Summer National Meeting in San Francisco. The new version addresses several key issues in the life settlement marketplace, including an emerging and often controversial type of life insurance practice sometimes referred to as Stranger-Originated Life Insurance (STOLI). It imposes a five-year ban settling a life insurance policy with specified elements indicative of a STOLI transaction. The amended Model also reportedly strengthens several consumer protections.

Some of the so-called "Poolman amendments" have application with regard to  potential regulation concerning the business practices of companies engaging in structured settlement factoring transactions. Among them:

• enhanced compensation disclosure transparency rules,
• prohibitions on what can and cannot be said in settlement marketing materials,
• an expanded definition of what constitutes fraudulent activity

It is the kind of resolve that resulted in the above that the structured settlement industry, including NSSTA and the SSP, the trial lawyer community and, perhaps, any responsible and willing members of NASP must have in order to prevent the abhorrent practice of factoring or attempting to factor structured settlements within a short period after issue. I am familiar with a guardian who attempted and has thus far failed to factor his ward's structured settlement payments before the annuity was even issued. And a prominent NASP member in an act of shameless corpulence, was only too willing to consider it. This kind of practice erodes lawyers comfort level with structured settlements and begs for regulatory intervention. I will remind those who have maligned Allstate's AFEN exchange, that Allstate told me that it will NOT consider a transaction within 2 years of issue.

Ben Fun Gives Allstate a Bend Over (But Their Tushie Isn't Red)

Rhonda Bentzen, author of the Ben Fun Blog and doyenne of structured settlement factoring, lambastes Allstate Life Insurance Company over perceived "factoring" practices  and concerning the purported experience of one of her callers and suggests that "they should stick to what they know". Frankly, despite all the rumor spreading nobody has supplied me with any "smoking guns"of malfeasance and my own investigation leaves me questioning the motivation of these voices of Allstate criticism.

There have been a number of false rumors spread about what happens with the Allstate Life Insurance Company Advanced Funding Exchange Notice (AFEN rider), attached to all structured settlement annuities funded with Allstate (also extended to structured settlement annuitants prior to the introduction  of the AFEN), which provides controlled liquidity to an Allstate Life Insurance Company, or Allstate Life Insurance Company of New York, structured settlement annuitant with unexpected needs who has exhausted all other opportunities.

Besides Bentzen's recent posting, Jack Meligan of Settlement Professionals, Inc, in West Linn Oregon (see "Water Buffaloes or Oz?") and one or two others have squawked that  (1) Allstate purportedly doesn't give a competitive discount rate to annuitants who want to sell their structured settlement payment rights (2) That Allstate is as aggressively in the structured settlement factoring business as Symetra is with Clearscape Funding Corporation, and therefore they should be kicked out of the NSSTA, or that NSSTA is hypocritical for allowing Allstate to be a member, but not Benzten (3) will not do a deal unless a minimum $25,000 is needed and snoozing yada yada yadas...

Despite my prior investigation which revealed that Allstate Life Insurance Company's AFEN unit only sends out one letter per year informing annuitants of the existence of the AFEN rider, a usually reliable "informant" supposedly had "piles of letters" that would prove Allstate's alleged "bad intent. I told the informant that my investigation revealed that such letters are sent out to each annuitant annually and asked him or her if he or she could show me evidence that any two or more within the "pile of letters" were to the same person within a 12 month period. It turns out they couldn't and that all of these letters were to different Allstate Life annuitants. This is consistent with what I learned in my investigation.

Regarding the discount rate used by Allstate it's 11%. And if you are a factoring company and can beat it for an annuitant who really needs it and has no other alternatives , great for the annuitant. At the very least, members of the public should know that if you have to initiate a settlement transfer you can use Allstate for a "pick and roll" with other factoring companies. You know you will do 11% or better instead of the 19+% that one also sees.  As for Bentzen she benefits if she blows them away.

As far as the $25,000 minimum,  where's the beef? There are transaction costs with any factoring transaction and Allstate has decided it will not incur such costs on small likely repetitive deals which only serve to give the annuitant the belief that the annuity is some form of bank account. Again this is a competitive point for Bentzen and others so why complain?

As I stated in one of my prior posts Allstate will not do an AFEN deal when the annuity has been in force less than 2 years. We cannot say that of other companies that buy structured settlement payment rights. I am aware of a case that JG Wentworth was willing to engage the guardian of a minor annuitant on before the case was even funded as a structure.

An executive from Allstate told me on Friday that they may do one out of 60 AFEN deals. Bentzen says that they should stick to what they know. Clearly they are.

Structured Settlement Professionals, Settlement Planners can expect a release from Allstate Life Insurance Company, including an updated Question and Answer on the AFEN rider in the near future. If anyone has any concern I suggest that you stay in touch with your structured settlement professional, structured settlement broker or settlement planner for an update on this.

Allstate AFEN Rider: Engagement With Structured Settlement Annuitants Stimulates Debate

by Structured Settlement Watchdog®

In a free market system, price is determined by the unregulated interchange of supply and demand. In a most simplistic sense suppliers can set prices for the products or services that work for them and if consumers seeking those products or services find them attractive, there will be demand. A retail store sells apples for $10 a bushel and oranges at $8. Do people buy the apples or oranges? If price sensitive they might buy the oranges, but they might buy either or both for other reasons (e.g. have to make apple pie, squeeze orange juice or make a citrus salad).

In the structured settlement industry does the lowest price always get the business? It may increase demand, but a more highly rated insurance company may also get a lot of business, as others may be willing to pay more for the perception of added security or diversification.

Some, myself included, take umbrage at the discount rates that are charged by certain companies who purchase structured settlement payment rights which are then often compounded by add on fees. My post "What's Your Deep Discount Rate?" includes a mandatory New York State GOL 5-1703 disclosure from a JG Wentworth transaction that reveals an incredible 19.90% effective discount rate! The base rate in that transaction was deemed to be 5.4%! It is clear that I am not a fan of JG Wentworth (and its alter egos) predatory advertising practices. They are obviously getting those prices from impulse sellers. It's up to market forces to beat them.  Perhaps judges approving such transactions should make it compulsory for the person to show evidence of shopping by including a minimum number of comparison quotes in the "qualified order" petition.

While some castigate the Allstate AFEN program, the fact is Allstate is not holding people back from free market supply and demand and if people shop, and many do, they may get a better deal. Allstate offers an alternative. If you don't like Allstate's alternative then don't sell your payment rights to them. Don't you think that if Allstate really wanted to be in the factoring business it would just drop its discount rate and blow everyone away?