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

"When Big Risk Big Rewards No Longer Make Sense" But Annuity.Org Promotes B++ MYGA

by John Darer CLU ChFC MSSC CeFT RSP CLTC

When Big Risk Big Rewards No Longer Makes Sense But Neither Does Annuity.org's Advertising

Annuity.org's is feeding its Ying by heavily promoting annuities, using the tag line "When Big Risk Big Rewards No Longer Make Sense" at the same time it is feeding its Yang by (1) soliciting structured settlement annuitants to part with their structured settlement payments for what amounts to pennies on the dollar and (2) lists its top MYGA offering as a 10 Year fixed rate of 6% from a B++ rated company.

What is a MYGA?

A multi-year guaranteed annuity, or MYGA, offers a predetermined and contractually guaranteed interest rate for a fixed period of time.

According to A.M. Best a B++ rating represents companies  that "are stable but have room for improvement. The long-term outlook may be unsure". Synonyms for unsure include lacking confidence, equivocating,..just the type of words that might cause an annuity prospect to question. See 35 Synonyms & Antonyms of UNSURE | Merriam-Webster Thesaurus

Is "may be unsure" a risk? What Do Professonal E&O Carriers Think?

"Virtually all E&O carriers place some type of insurer exclusion on their policies, either in the exclusions section of the basic form or by endorsement. E&O carriers have come to the conclusion that an agent's selection of insurers to represent and place business with is wholly within the agent's control. If the agent places business with a company that has a poor financial rating or no rating at all, E&O carriers believe it is a risk that the agent has assumed. However, the exclusions vary significantly from one insurer to another. Some policies exclude any E&O claim arising out of placement with a low-rated or unrated insurer, even if the insurer is solvent. You need to take a look at your own policy, or any prospective policy, to determine the exact scope of the insurer exclusion.

Ask the following questions. (1) What is the Best rating threshold for application of the exclusion? Some exclusions apply if the insurer is rated less than "B" while others apply a threshold as high as "A-." (2) Does the exclusion apply to claims arising out of placement with such a carrier (a) whether it is insolvent or not (worst) or, (b) when it becomes insolvent, even if the claim against the agency does not arise out of the insolvency (bad), or (c) the insurer's inability to pay a claim due to insolvency (better)? (3) Does the exclusion apply even if the insurer had a favorable rating at the time of placement but later became insolvent (bad), or only if the insurer's rating didn't meet the threshold at the time the policy was placed (better)? (4) Are there any other exceptions to the exclusion? In addition to a Best-rating threshold, many E&O policies include an exception for insurers protected by a state guaranty fund".  See Ten Things You Don't Want to See in Your E&O Policy | IIAT #3

 

 

Is Comprehensive Settlement Planning "Casino Buffet" Needed When You Want a Slice of Pizza?

by John Darer CLU ChFC MSSC RSP CLTC

If you're in New York City looking for a slice of pizza and a cold brew do you need to go to the casino buffet?   Of course not.   Are you really going to wait on line for an hour and pay $40-$60 for all you can eat and thousands of choices, when you can find a pizza joint on just about every corner and pay $2 a slice for your guilty pleasure because (1) that is what you want;  (2) that is what you think will be satisfying;  (3) let's face it, New York makes some great pizza. So does New Haven!

While I am a believer in comprehensive settlement planning, I also think that my colleagues in the settlement industry must be mindful of creating and pushing a figurative "casino buffet" when all someone wants or needs is a savory slice of New York goodness. Be mindful that when someone is in transition the overwhelm wire can be tripped easily.

Of course if you apply a "fiduciary standard" to every situation, in this metaphor do you have a duty to disclose all the side effects of eating a New York slice with a cold one (or a glass of merlot)?  Or how much profit the pizza shop owner makes after expenses and paying off the wise guys for protection?   Or how much the delivery guy makes.

There's a reason that Buffalo Wild Wings, Shake Shack (and places whose menu revolves around a simple core product)  do well when people are looking for what they are known to offer. They don't confuse/overwhelm you with choices that put you in a fog. It's a known quantity. Familiarity is comfort for some.   By comparison the Rio Carnival World Buffet located in Las Vegas takes almost 10 minutes to walk the length of the buffet station. According to the Guinness Book of World Records, the largest buffet consisted of 5,612 different dishes in an event organized by the Art of Living Foundation (India) at Sri Sri Dham, Ahmedabad, India, on  November 2, 2010.

Perhaps I'm oversimplifying, but I sense a high rah-rah factor for a one stop shop.  Walmart and Target are massively successful retailers but not for every one every day.  There is plenty of room for different business models, boutiques and nimble operations.

Sometimes you just want a slice and a glass of wine with your honey

 

Sometimes you just want a slice and cold brew with your bud

 

 

 

 

 

 

 

 

 

 

 

 

 

 

So many choices and this is just the dessert buffet!    Time for a "Decision Free Zone" at the Cosmopolitan in Las Vegas?

 

People With Disabilities Under 65 | Three Hurdles to Overcome To Get On Medicare

by John Darer® CLU ChFC MSSC CeFT RSP CLTC

Before they can get on Medicare, people with disabilities, who are under age 65, must first RECEIVE Social Security Disability Insurance (SSDI) for 24 months.

But SSDI generally does not begin until five months after an individual’s disability has been certified. As a result, people with disabilities face three consecutive waiting periods prior to getting health coverage:

(1) a determination of SSDI approval from the Social Security Administration; Among the requirements worth mentioning is that there is a "recent work" test and "duration of work" test requirement in most cases to determine eligibility for SSDI.

(2) a five-month waiting period to receive SSDI; AND,

(3) another 24-month waiting period to get Medicare coverage.

Limber up!  You have 3 hurdles to negotiate in order to get Medicare if you're under age 65!

Last update August 19, 2022

Personal Settlement Annuity from Pacific Life | Post Settlement Annuity | Ah-Oh Annuity

by John Darer CLU ChFC CeFT MSSC RSP CLTC

The Personal Settlement Annuity is an option for settlement funds where constructive receipt has already occurred . With a Personal Settlement Annuity,  If constructive receipt has occurred  "oops" doesn't mean the "poops".  

Ah Oh! You Already Signed A Release the Other Day

There is a solution.  Not an apples to apples solution mind you, but a solution that can provide predictable, safe, secure and stable core income using structured settlement annuity pricing , which is often more favorable than traditional single premium immediate annuities (SPIA).  

A  Personal Settlement Annuity is only available to settling plaintiffs within a very short time after a settlement has concluded

The premium used to fund the personal settlement annuity must come from a settlement that was for payment of damages under IRC 104  (personal physical injury).

• Unlike payments from a structured settlement for damages, a portion of the payments from a personal settlement annuity is taxable.  
• Unlike a structured settlement annuity,  a personal settlement annuity must comply with  IRC 72(u)  [ for example, in order to avoid a 10% penalty, payments must begin within 13 months, begin at or after age 59.5, ,or be spread out over the life expectancy of the annuitant]
• Pacific Life  is the issuer of the Personal Settlement Annuity and is rated A+ by A.M. Best

Whether or not a Personal Settlement Annuity makes sense will depend on an individual's needs. Other forms of non qualified income annuities may also make sense and should be explored such as deferred income annuities (DIA) and/or indexed annuities.  These types of annuities may be used, among other solutions in combination, to help a settling plaintiff achieve his or her financial goals.