Kitces Report on Structured Settlement Investing Feed

March 30, 2017

Michael Kitces Swings and Misses on Structured Settlement "Annuity" Investments

by Structured Settlement Watchdog

In a still published 2012 Kitces Report article entitled "Is Structured Settlement Annuity Investing a Good Idea? Yes But...", Michael Kitces proved that even people with 8 financial credentials were getting it wrong about structured settlement investments. Very smart guy. Unfortunately Kitces didn't do his homework here.

First of all, you can't invest in a structured settlement annuity. Impossible.

Kitces got it completely wrong when  he says  (see screenshot below) that "generally the sale of a structured annuity results in the transfer of the actual annuity contract". It doesn't involve the sale of a structured annuity or any annuity.  It involves the transfer of structured settlement payment rights. There is a distinction!

A "Structured Settlement Investment" is an investment in structured settlement payment rights not an investment in an annuity as misleading ads touting " secondary market annities" suggest.  The structured settlement payment rights are transferred in a structured settlement factoring transaction

Whether through ignorance, poor research or intent, the structured settlement secondary market ripples misinformation about structurred settlements to the detriment of consumers and even those with 8 financial credentials.

In the comments to the same article one of the commenter chimes in about Kitces' comments about state guaranty fund payments to investors.

"-the beneficiaries, payees or assignees of insured persons are protected as
well, even if they live in another state [so if you have the annuity assigned to you, you are protected]"

This comment was irresponsible then and would be reckless if it were made in 2022 (see highlighted #2 below)

  1. But you DON'T have the structured annuity assigned to you.  You never would. The structured annuity is owned by the qualified assignment company as it was when the structured settlement was established for the benefit of injured person as compensation for their injuries.  What is happening is the transfer of structured settlement payment rights.  Structured settlement payment rights are not an annuity.  
  2. The 2017 updates to the Life & Health Guaranty Association Model Act (#520), expressly exclude investors in acquired structured settlement payments rights.  37 States have adopted the 2017 revisions as of June 2022 . The bad news for investors is that there is a retrocative exclsuision from the adoption date in your state, so you're not protected even if you bought the investment prior to the adoption date in your state.
Kitces Report 3-6-2012 Structured Settlement Investments Blooper
Look at the First Line of Kitces' response. Shocking!

 Last updated August 17, 2022

Posted at 01:42 AM in Credibility of Financial Advisors, In Force Structured Settlement Market Commentary and Discussion, Kitces Report on Structured Settlement Investing, Misinformation about Structured Settlement Factoring, Misinformation About Structured Settlement Investments, Structured Settlement Investments, Structured Settlement Payment Rights, Structured Settlement Transfers, Structured Settlement Watchdog® |

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Guide to Structured Settlements 2024

  • What is a Structured Settlement? What You Need to Know
    Structured settlements and what you need to know about them including a helpful introductory video featuring A.M. Best Client Recommended Structured Settlement Expert and Registered Settlement Planner John Darer of 4structures.com LLC
  • How Do Structured Settlements Work? How Structured Settlements Work
    How structured settlements work, including 4structures.com LLC's super helpful structured settlement flow chart/diagram showing how structured settlements fit in on the spectrum of settlement planning solutions.
  • Rated Ages and Structured Settlement Cost
    Rated Ages for Structured Settlement Annuities present advantages to all parties. Shift the mortality risk to a life insurance company whose business it it is to assess mortality risk to price its life insurance and annuities. Rated ages boost your structured settlement annuity benefit per premium dollar, or your yield on lifetime payments. Rated ages help to reduce the cost of funding a Medicare Set Aside arrangement where a Structured MSA, is being used { WCMSA LMSA or NFMSA].
  • Top Structured Settlement Annuity Companies 2024
    Which life insurance companies issue structured settlement annuities in 2024? A list of current structured annuity issuers, the location of their home offices and their financial ratings from A.M. Best, Moodys, Fitch, Standard & Poors and/or other Tier1 NAIC ratings, with links to their websites and other useful information. Last updated June 14, 2024
  • Treasury Funded Structured Settlements
    Treasury Funded Structured Settlements are a settlement option for the most conservative using the OTHER permissible qualified funding asset under IRC 130(d), United States Treasury Bonds in addition to, or instead of, structured settlement annuities. Treasury Funded Structured Settlements can also be used to fund installment sales, also known as structured sales and other non qualified structured settlements.
  • Compare Structured Settlement IRR to Other Settlement Alternatives
    Use the Taxable Equivalent Yield chart to help compare the Internal Rate of Return (IRR) of a structured settlement to other alternative or complementary investments. Need help with the chart? Call 4structures.com® LLC at 888-325-8640
  • Structured Settlement Payments | Types of Structured Settlements 2024
    Ways You Can Structure Your Settlement Payments in 2024. With a structured settlement you can have more than one type of payment in a single contract. Different types of structured settlement payments can be customized and combined to meet your needs on a stand-alone basis, or in conjunction with other financial products. Diversify your structured settlement, if you wish, by funding with more than one annuity issuer, with treasury funded structured settlements, index linked structured settlement payments and market based structured .
  • Structured Attorney Fees for Tax Deferral for Attorney Contingency Fees
    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.
  • Structured Settlement Annuity Company Customer Service Phone Numbers
    Receiving structured settlement payments from your own structured settlement or inherited structured settlement? You'll like this huge time saver. Click the title for a link to a comprehensive list of customer service telephone numbers that includes both current AND former structured settlement annuity issuers and reinsurers. If you have simple bank or beneficiary changes, or if the insurance company that issued the structured annuity has merged, sold or spun off its block of structured annuity business (e.g. Aviva, Allstate, Transamerica, AEGON, GE Capital, Liberty, CNA, Confederation Life), oran annuity issuer has changed its name and you're trying to track them down. Here you go! The list is regularly updated. Last updated May 20, 2024.
  • Structured Settlement Quote Lock-Ins | What You Need To Know
    What does a Structured Settlement Lock-In Mean? How do plaintiffs, defendants and insurers benefit from a structured settlement quote lock in when finalizing a settlement? How does the defendant/insurer/court benefit from using a structured settlement lock-in? Where to be careful when using structured settlement lock ins.
  • What Are Structured Settlement Annuities?
    Structured settlement annuities are annuities that can provide one or more customized annuity payment streams in a single contract. Read about structured settlement annuities here.
  • History of Structured Settlements
    Tracing the roots of structured settlements history from 1918, when Congress exempted damages for personal injury or sickness from income tax, to the establishment of structured settlements as a core personal injury settlement planning tool to the present day.
  • What Are Market Based Structured Settlements?
    Market based structured settlements are an alternative or supplementary structured settlement solution for the plaintiff, attorney or law firm that: 1. Can afford to take some market risk 2. Have discretionary settlement dollars. Claimants and attorneys alike may find that market-based structured settlements provide the opportunity to receive tax-free income, or tax-deferred income, while enjoying growth potential.
  • iStructure |Uncapped Fixed Index Structured Settlement Annuity
    iStructure is an innovative game changing fixed index structured settlement annuity for plaintiffs or attorneys. with an intermediate to long term horizon
  • Structured Settlements and Longevity Risk| What Are the Odds?
    Do your financial resources give you enough road, or will the road run out before you do? A structured settlement annuity helps mitigate the risk of outliving your savings, no matter how long you live. A structured settlement can include one or more customized payment streams and types.

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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