Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews

Fitch Affirms Corebridge Financial ratings at A+ Stable

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Fitch Ratings has affirmed Corebridge Financial's ratings at an A+, with a Stable outlook. Fitch Affirms Corebridge Financial's Ratings; Outlook Stable - MarketScreener

Corebridge provides structured settlement annuities for both qualified and non-qualified structured settlements through its subsidiaries American General Life Insurance Company (in all states except New York) and United States Life Insurance Company in the City of New York. Corebridge subsidiaries also writes Funding Agreements for use in non qualified assignments with a variety of applications.

Corebridge Financial, a multinational financial services company,  was created in 2022, as a spinoff from AIG Life & Retirement

This web site is not endorsed by, directly affiliated with, maintained, authorized, or sponsored by any insurance or other company referenced herein. All products, services and company names are the registered trademarks of their original owners. The use of any trade name or trademark is for identification and reference purposes only and does not imply any association, sponsorship or endorsement between the trademark holder and the operators of this web site.

 

What Happens if You Die and Never Reviewed or Changed Beneficiary in 37 Years?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Why It's Important to Name and Review Beneficiaries? 

I've previously reviewed the important topic of beneficiary designations extensively in two blogs on the 4structures.com Settlement News Network blog.

Structured Settlement Beneficiary | Why It's Important (4structures.com)

Structured Settlement Beneficiary Designations (4structures.com)

This is also relevant and important to life insurance, bank accounts, investment accounts and retirement accounts and overall estate planning. "Setting it and forgetting it" could have unintended consequences.  Check out the Rolison case that has been heavily litigated in the Western District of Pennsylvania and a had published decision in April 2024.  See The Procter & Gamble U.S. Bus. Servs. Co. v. Estate of Rolison, Civil Action 3:17-CV-00762 | Casetext Search + Citator

Losinger is Winner as Former Partner of Dead Proctor & Gamble Employee Inherits $1M Plus 37 Years After Split

In 1987, Jeffery Rolison filed a handwritten form naming his then partner, Margaret M. Sjostedt  (now Margaret Losinger) the sole beneficiary of his P&G retirement account. Rolison never changed it between 1987 and his death in 2015.  Rolison and Marget broke up in 1988. Margret is set to inherit that $1 million retirement account (over Rollison's estate) as Rolison never updated the beneficiary designation and Margaret was still listed as the beneficiary when he died.

THE PROCTER & GAMBLE U.S. BUSINESS SERVICES COMPANY, as Plan Administrator and on Behalf of THE PROCTER & GAMBLE PROFIT SHARING TRUST AND EMPLOYEE STOCK OWNERSHIP PLAN and THE PROCTER & GAMBLE SAVINGS PLAN Plaintiff,
v. ESTATE OF JEFFREY ROLISON, Deceased, MARGARET M. LOSINGER, and MARY LOU MURRAY Defendants.
IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIANo. 3:17-CV-00762
(JUDGE CAPUTO)

"Rolison Knew That He Needed to Check and Change Beneficiary Numerous Times But Simply Failed to Do So"-Court

"There no record evidence in this case that supports the Estate's position that Rolison failed to change his beneficiary status because of any misrepresentation or omission on P&G's part. Instead, again, the record reflects that P&G warned Rolison to check and change his beneficiary designation numerous times between 1987 and 2015 and that “Rolison knew that he needed to take affirmative steps to change his previous beneficiary status,” but that he “simply failed to do so.” - Court

 

 

Do Structured Settlement Payments Have to Be Equal Payments?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Whether Structured Settlement Payments Have to be Equal (or Substantially Equal) Depends on the Nature of Claim and the Settlement Planning Solution being used

The substantially equal payment requirement applies in situations where:

- There is a non-qualified assignment where a periodic payment obligation is assigned to a U.S. domestic assignment company.
- An immediate annuity is utilized as the funding asset.

What are Non Qualified Structured Settlements and Non Qualified Assignments for Tax Deferral (4structures.com)

IRC Section 72(u) was added as part of the Tax Reform Act of 1986.

• An annuity contract owned by a non-natural person is not considered an annuity contract for tax purposes  IRC §72(u)(1)(A)
• The income on the contract for any taxable year of the policyholder shall be treated as ordinary income received or accrued by the owner during such taxable year   IRC 72(u)(1)(B) and also cited in a presenation to the United States Senate Committee on Finance May 24, 2016 JCX 45-16 (May 20, 2016) "By contrast to the treatment of life insurance contracts, if a deferred annuity contract is held by a corporation or by any other person that is not a natural person, the income on the contract is treated as income accrued by the contract owner and is subject to current taxation. The contract is not treated as an annuity contract".

IRC 72(u)(4) Notable Exceptions to Ownership of Annuity by Non Natural Person

This subsection shall not apply to any annuity contract which—

(A) is acquired by the estate of a decedent by reason of the death of the decedent,

(B) is held under a plan described in section 401(a) or 403(a), under a program described in section 403(b), or under an individual retirement plan,

 

(C) is a qualified funding asset (as defined in IRC 130(d), but without regard to whether there is a qualified assignment),  What is a Qualified Assignment? (4structures.com)

 

(D) is purchased by an employer upon the termination of a plan described in section 401(a) or 403(a) and is held by the employer until all amounts under such contract are distributed to the employee for whom such contract was purchased or the employee's beneficiary, or

 

(E) is an immediate annuity.

IRC 72(u)(4) (C) and (E) are germane to structured settlements

A qualified funding asset means any annuity contract issued by a company licensed to do business as an insurance company under the laws of any State, or any obligation of the United States  Subject to IRC 130(d).

1. such annuity contract or obligation is used by the assignee to fund periodic payments under any qualified assignment. 
2. the periods of the payments under the annuity contract or obligation are reasonably related to the periodic payments under the qualified assignment, and the amount of any such payment under the contract or obligation does not exceed the periodic payment to which it relates,
3. such annuity contract or obligation is designated by the taxpayer (in such manner as the Secretary shall by regulations prescribe) as being taken into account under this section with respect to such qualified assignment, and
4. such annuity contract or obligation is purchased by the taxpayer not more than 60 days before the date of the qualified assignment and not later than 60 days after the date of such assignment.

Types of Structured Settlement Payments | Structured Settlement Payment Options (4structures.com)

What is an Immediate Annuity under IRC 72(u)(4)(E)?

For purposes of this subsection, the Code says the term "immediate annuity" means an annuity—

A. which is purchased with a single premium or annuity consideration,

B, the annuity starting date (as defined in subsection (c)(4)) of which commences no later than 1 year from the date of the purchase of the annuity, and

C. which provides for a series of substantially equal periodic payments (to be made not less frequently than annually) during the annuity period

So there you have it. That's where the equal payments (or subtantially equal payments) comes from.

Why Doesn't IRC 72(u) apply to annuities owned by a Qualified Assignment Company?

Because there is an express exception made in IRC 72(u)(3)(C) for an annuity that is a Qualified Funding Asset under IRC 130(d)

Non Qualified Assignment Solutions with Domestic Assignment Company Where IRC 72(u) Applies

• Corebridge subsidiaries American General Life Insurance Company and United States Life Insurance Company in the City of New York through their appointed brokers, where an annuity is used to fund an obligation to make periodic payments.  Note that the same product providers offers an alternative niche domestic solution using a funding agreement (in lieu of an annuity) as a work around for where a deferral is desired without going to an offshore assignment company.
• Metropolitan Tower Life Insurance Company (MetLife) 

Last updated August 8, 2024

 

 

 

 

It's a Jumble Out There | Fixed Income Annuity, Fixed Indexed Annuity or Index Linked Annuity?

by Structured Settlement Watchdog

It's a Jumble Out There

I was surprised to find this fixed income annuity Jumbleaya on the website of a group of esteemed industry colleagues:

Have a seat folks!

• "A fixed income annuity is an annuity with some guarantee against loss while also allowing for market rates of return inside the annuity.
• The upside in these annuities is usually capped at some amount, but the annuities offer downside protection (i.e., if the markets go down, the annuity payments remain the same).
• So, a fixed annuity often offers the potential of better rates of return than the structured settlement annuity fixed rates are offering".

Note: I've bullet pointed to isolate the 3 statements for ease of appreciating the contradiction.

What does Fixed mean?

Fixed Definition & Meaning - Merriam-Webster    "not subject to change or fluctuation (e.g. a fixed income) "

What is an Income Annuity?

Income annuities are an insurance product issued by life insurance companies that convert a premium to income starting immediately ( Immediate Annuity or " SPIA" ), or in the future  (Deferred Income Annuity or "DIA")

What Is a Fixed Annuity? Uses in Investing, Pros, and Cons (investopedia.com)

What Are Index Linked Structured Settlement Annuities?

An indexed linked structured settlement annuity is a tax-advantaged type of structured settlement option that provides protection for when the market goes down, combined with an opportunity for growth that varies with the market index the annuity is tied to. It gives you more income growth potential than a fixed income structured settlement annuity. or a fixed income structured settlement income annuity with a fixed percentage COLA, along with less risk and less potential return than a variable annuity.

Three life insurance companies that issue structured settlement annuities have index linked structured settlement annuity options:

1. Pacific Life Insurance Company and Pacific Life & Annuity Company introduced their Index Linked Annuity Payment Adjustment Rider (ILAPA), in 2014  ILAPA (pacificlife.com)
2. Independent Life Insurance Company introduced iStructure in 2021 iStructure Annuity | Industry's 1st Uncapped Index-Linked Structured Settlement Annuity ; and 
3. The Prudential Insurance Company of America introduced Income Advantage Prudential Income Advantage | Structured Settlement Index Linked (4structures.com)   Guaranteed Income Secure Growth Potential (scene7.com). Prudential refers to its product as "index linked" in consumer facing communication.

Currently, no life insurance companies offer variable structured settlement annuities. 

 

 

Survivor Payments | "All payments From a Structured Settlement Are Guaranteed" ?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Structured Settlement Survivor Payments

Seen on the Internet about Structured Settlements this week

A. "If no beneficiary was designated, the payments will become part of the recipient's estate and be distributed according to their will or state laws".

The statement needs further clarification.

Commentary

1. If the Payee dies without having designated a beneficiary to the annuity issuer prior to the Payee's death, AND there are any remaining period certain payments or guaranteeed lump sums, those payments will be paid, when due, to the Estate of the Payee. From there, payment will be distributed in accordance with the Payee's will, if there is one, or state intestacy laws if there is no will.  See intestacy | Wex | US Law | LII / Legal Information Institute (cornell.edu)

2. If a Commutation Rider is in place when the Payee dies, any remaining certain payments and guaranteed lump sums are commuted to a lump sum in accordance with the terms of the commutation rider.

3. If the Payee dies after there are no remaining period certain payments or guaranteed lump sums then payments will cease at the Payee's death.  

Structured Settlement Beneficiary | Why It's Important (4structures.com) May 8, 2024 update

Structured Settlement Beneficiary Designations (4structures.com) May 24, 2021

B. "All payments from a structured settlement are guaranteed"

Commentary

All payments from a structured settlement are contractually guaranteed in accordance with the terms of the contract. 

When a structured settlement is established there are multiple contracts

• A settlement agreement and release which establishes an obligation to pay periodic payments as damages in exchange for a release of claims.
• A qualified assignment, which is a subsitution of obligors from a Defendant or his/her/its insurer(s) to a qualified assignment company
• An annuity contract, which is purchased as a "qualified funding asset" by the qualified assignment company and is owned by the qualified assignment company.

How Do Structured Settlements Work | Structured Settlements Explained (4structures.com)

While the terms "guaranteed" and "certain" are often used synonymously by those holding an insurance license, including some settlement planners and structured settlement brokers and even lawyers, such use is inaccurate and can lead to misinterpretation and/or misunderstanding by Payees.

 

Lack of Interest | Texas Bankruptcy Attorney's Structured Settlement Sophistry Fails

by Structured Settlement Watchdog

Texas bankruptcy attorney Carron Nicks lays out a 100% fat free structured settlement example for NOLO

"If you agree to take your award as a structured settlement, instead of receiving one large amount from the plaintiff, you will receive periodic payments over the course of a fixed number of years. For example, if you win $500,000, your structured settlement might require the defendant to pay you $50,000 every June for ten years". 

NOLO self describes as "the pioneer in legal self help" on the NOLO website, which also solicits users with  "Sidestep the lawyers with do-it-yourself books, documents, and software". 

Nicks' structured settlement sophistry for NOLO fails 

Structured settlements include interest

1. Nicks fails to differentiate between a settlement and an award. A settlement is not an award. It's basic stuff. An award is not a settlement. The Awarded a Settlement Vortex in News Organizations, Law Firms, Finance Textbooks, Settlement Planners - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews (typepad.com)
2. Carron Nicks nauses it up with this doozy "if you agree to take your award (mistake) as a structured settlement, instead of receiving one large amount from the plaintiff (big mistake), you will receive periodic payments over the course of a fixed number of years".  
3. Nicks uses an improbable example where the exemplar structured settlement simply parcels out principal over 10 years with no interest. As they say in Texas, "I smell what you're steppin in".
4. A settlement is a compromise which requires a "meeting of the minds". If you agree to a structured settlement there are many types of payments not just a fixed period of payments. And a single structured settlement annuity contract can be comprised of one or more payment streams. See Types of Structured Settlement Payments | Structured Settlement Payment Options (4structures.com)

What a structured settlement would actually pay with a $500,000 cost and a 10 year annual payout

At time of publication, a book rate MetLife structured settlement quote funded on July 1, 2024 with $500,000.00, would produce annual payments of $62,939.35 for 10 years starting July 1, 2025.

Said a different way, it would not take $500,000.00 to produce $50,000.00 annually for 10 years, if it werefunded with a structured settlement annuity.

NOLA educated Carron Nicks, whose NOLO bio professes her love for "beignets, gumbo, and gallons of cafe au lait", needs to fatten up the interest in her examples. I dare say that I recommend the Bananas Foster at Brennan's in Houston or Commanders Palace in NOLA, or Bourbon Biscuit Bread Pudding, eaten with a demi-tasse spoon, or better yet, someone with a license, relevant credentials and appointments and software to easily obtain a structured settlement quote.

Get Structured Settlement Quotes Now| Structured Settlements Quotes 2024 (4structures.com)

A Structured Settlement Is All It's " Quacked Up" To Be | John Darer Reviews

by John Darer CLU ChFC MSSC CeFT RSP CLTC Structured Settlement Expert

Ways to Use Structured Settlements in Settlement Planning 2024 (4structures.com)

Comprehensive Settlement Planning Services for Injured Persons & Law Firms (4structures.com)

Settlement Experts and Services for Defendants, Lawyers and Claims Pros (4structures.com)

New York Structured Settlements Experts | Settlement Consulting (4structures.com)

Structured Settlement Experts, Settlement Planning Experts NY | CT| NJ | USA | London (4structures.com)

Independent Life Reinsurance Ratings | Settlement Planner Deceptive Rating Analysis

by Structured Settlement Watchdog

Doing a side by side comparison between structured settlement annuity issuers without identifying the rating agency does not properly inform the consumer in my opinion

Despite express communications from Independent Life Insurance company to contrary for more than 4 years, some settlement planners are misrepresenting the nature of Independent Life's ratings and its reinsurance in side by side structured settlement annuity issuing company comparisons when business is on the line. The question is why are some settlement planners misprepresenting this?

Other Life Insurance Companies Use Reinsurance in Their Financial Operations, Why Single Out Independent Life Inurance Company?

Why is the settlement planner singling out Independent Life? Zat is ze question! 

What Independent Life Insurance Company Expressly States on its website

1. "High marks from rating agencies"

"Independent Life earns high marks from rating agencies designated and approved by the Securities and Exchange Commission: A by Egan-Jones and A- by KBRA.  The rating agencies cite Independent Life’s high credit quality investment portfolio, the diversified experience of the company’s management team and demonstrated acceptance by key industry players".

 

Independent Life with Other Rating Agencies Besides Egan Jones and KBRA

Independent Life does not have an A.M. Best Rating

Independent Life does not have a Moodys Rating

Independent Life does not have an S&P rating

Independent Life does not have a Fitch Rating

Independent Life has a Weiss Rating

A.M. Best is the most commonly used rating if only one rating is used.

Each of the rating agencies uses at least a letter rating. Some may be modified with a plus or minus  ( S&P, A.M. Best, Weiss, KBRA, Fitch, Egan Jones), while others may be modified by lower case letters and/or numbers.  (Moodys).  

A settlement planner who spreadsheets proposed diverse structured settlement annuity placements with an Egan Jones Rating and/or KBRA rating in the same line as AM Best ratings, without clear differentiation, within a row simply labeled "ratings", is simply outrageous conduct.

Read my blog on the Settlement News Network Independent Life's Reinsurance with Hannover Life Re | What It Is and Isn't (4structures.com)

 

 

 

 

Structured Settlement Industry BEST Quarter EVER in Q1 2024 After Record 2023!

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Has the "golden age of structured settlements" returned?   

• March 2024 premium production for the structured settlement industry was $774 MILLION!
• Q1 2024 industry production was $2.273 BILLION, a new quarterly record
• On top of the Structured Settlement Industry's $8.68B Record Year in 2023

What's Behind Structured Settlement Industry Growth?

John Darer reviews what he sees

1. One obvious reason is the return of interest rates post pandemic, beginning in 2022 which eventually eroded anti-selection bias.  Contrast when in April 2020, the 10 year United States Treasury yielded 0.40% to the Internal Rates of Return seen in recent times on 10 year structures that have exceeded 4.5% and at times have exceeded 5%. Bear in mind that because periodic payments from qualified structured settlements (personal physical injury, physical sickness, wrongful death and workers compensation are income tax free[IRC 104(a)(1) and IRC 104(a)(2)], the payment recipient is benefiting from a very competitive taxable equivalent yield. See Tax Advantages of Structured Settlements | Taxable Equivalent Yield Chart (4structures.com)
2. It is clear from multiple sources and surveys that decumulation risk is a major concern for Americans. In June 2023, Allianz claimed that Americans fear running out of money more than fear of death. Nobel laureate William Sharpe has called decumulation "the nastiest problem in Finance".  Humans in Financial Transition are who we deal with. Structured settlements are an important part of the conversation and the solution.
3. Years of declining interest rates encouraged producing structured settlement industry particpants (including settlement planners) to up their game and be better educated and skilled at what they do. 
4. Diversification of product offerings within the industry. Annuity issuers and other product providers have stepped up to the plate.
5. Industry workflow systems continue to improve operating efficiency.
6. Increased investment by product providers and brokers/planners in business development tools. MetLife has made the most visible marketing efforts to be seen everywhere
7. Increased investment in knowledge by industry participants leads to more fluency in approach and delivery of services to clients and prospects that leads to greater opportunities
8. Continued growth of flexible business models. 
9. To some extent, there are Pandemic era backlog cases continuing to work their way to resolution.
10. To some extent the severity levels of claims have increased.

Why Structured Settlements?  Because Certain Sells®

 

 

 

 

 

Does a Structured Settlement Commutation Rider Simplify Inheritance?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Does a Structured Settlement Commutation Rider Simplify Inheritance?

"A commutation rider can simplify  inheritance. Without a commutation rider, a beneficiary must go through the process of selling their future payments to get access to cash sooner than scheduled", says Annuity.ORG, an Orlando based shill for factoring company CBC Settlement Funding of Conshohocken PA.

Let's examine their claim...

1. A structured settlement payee is contractually permitted to name and/or change beneficiaries by notifying the annuity issuer in writing and in a form acceptable to the annuity issuer. Most current annuity issuers have forms that can be downloaded for this purpose.
2. Commutation riders were introduced in the late 1990 to create liquidity to pay estate taxes at a time when the estate tax exemptions were much lower than they are today. 
3. Commutation riders were also later used where structured settlement payments feed into a Special Needs Trust (referred to in New York as a Supplemental Needs Trust). The local Medicaid agency will seek reimbursement of funds it spent at the death of the Payee/Trust Beneficiary. Some agencies even make a Commutation Rider mandatory (e.g. New York City area counties).
4. In both scenarios, the commutation rider must be established at the time of settlement and contain language required by the annuity issuer. The second one of my prior blogs highlighted below, addresses a 2019 decision in the Northern District of Georgia, emanating from a June 1998 settlement in a wrongful death case where denial of a commutation to  survivors of a survivor of a decedent in the 1996 ValuJet crash was upheld because the Settlement Agreement, Qualified Assignment and Release and Annuity Application lacked certain language.  
5. A structured settlement factoring transaction may take 60-90 days in the best of circumstances and requires the approval of a state court judges who must determine if such structured settlement transfer is in the best interest of any applicable beneficiaries. Rates of such transcations may exceed structured settlement commutation rates.
6. Commutation Riders often commute future payments NET of commissions paid to structured settlement brokers.  If death occurs shortly after settlement it could be quite a hit if there is a high percentage commutation in excess of what is actually needed to help pay a lien. Berkshire Hathaway introduced a Responsive Commutation Rider that potentially limits commutation to an objectve formula based on the amount of a Medicaid Lien or estate or death taxes

Here are some of my previous blogs about about Structured Settlement Commutation Riders

Structured Settlement Commutation Riders FAQ | What You Need to Know About Commutations - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews (typepad.com)  February 6, 2016

Estate Cannot Commute Structured Settlement to Lump Sum IF... (4structures.com) May 26, 2020

Structured Settlement Commutation Riders Must Be Revisited Before Estate Tax Cuts Expire in 2025 - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews (typepad.com) January 15, 2024

Structured Settlement Commutation Riders with SNTs Best Practices (4structures.com)  April 24, 2022 Updated  January 15, 2024

Last updated March 30, 2024