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

"Pension Fund Managers Working For Those With The Least To Lose Tend to Be The Biggest Patsies"

The following quotes are attributed to Agora Financial's Dan Amoss, CFA on today's issue of "The Five Minute Forecast" e-newsletter.

"Large pension fund managers working for those with the least to lose tend to be the biggest patsies when it comes to misguided investments. The speculation du jour is called a CDO, which stands for collateralized debt obligation.”

“The patsies, expecting they’ll get 20% annual returns with no risk, have been buying the riskiest tranches -- the ones that will absorb the first wave of defaults when they inevitably occur,”

“Putting lipstick on this pig may seem like a savvy way to generate profits for the likes of Bear Stearns, but it strikes me as dishonesty, not beauty. Angry politicians will know where to look when it comes time to look for scapegoats.”

Hmm, comforting thought to those seeking long term finanicial security. A structured settlement, deferred income annuity or structured sale annuity offers easy to understand guarantees,  without the spin du jour and without having to resort to "rouging up" farm animals.

The GPS For Fiscal Cancer

"The fact is, is that we don't face an immediate crisis. And, so people say, 'What's the problem?' The answer is, we suffer from a fiscal cancer. It is growing within us. And if we do not treat it, it could have catastrophic consequences for our country,"... "The cancer are massive entitlement programs we can no longer afford, exacerbated by a demographic glitch that began more than 60 years ago-- a dramatic spike in the fertility rate called the "baby boom."  David Walker, Comptroller of the Currency of the United States of America, March 2007 on his "fiscal wake up" tour. CBS News has the complete story at this link

Heard it before from political functionaries? I have. However this time it's a bit more haunting, perhaps because the horizon is not as far off for us at the tail end of the "baby boom" as it once was.

For those in the structured settlement and settlement planning field and our clients I think this makes what we do that much more meaningful. As government entitlements become less certain there will be a need for more certainty...the kind of certainty that can be provided by he products and services that we offer. Structured settlement annuities offer certainty, deferred income annuities offer certainty, structured attorney fee annuities offer certainty, structured sales annuities offer certainty and an IRC 1031 exchange alternative, divorce structured settlements,  environmental structured settlements and employment cases offer certainty.

If billowy clouds turn into "thunderheads and rolling fog" in the future our industry needs to be well positioned to be the GPS thats assists both injured claimants, their families, attorneys and the like to navigate the fiscal storm. It's important that the industry and individual practioners follow entitlement issues closely, to gauge how changes affect their clients, develop a deep understanding of the interplay and develop integrated solutions.

Prudential Financial Leads Structured Settlement Companies in Fortune Global 500 Rankings

Following a survey of its peers in the global life insurance industry, Prudential Financial has unseated perennial leader Northwestern Mutual as the 2007 top global insurance company-life and health category by Fortune magazine**. Mighty Northwestern Mutual has led this survey of industry peers for many years so this is just an incredible feat for Prudential.

Fortune's annual survey rates companies by their peers in the following categories:

Innovation
People management
Use of corporate assets
Social responsibility
Quality of management
Financial soundness
Long-term investment
Quality of products/services	.

Rankings of the life insurers in the Fortune survey who currently issue structured settlement annuities or are former structured annuity issuers

1. Prudential Financial ;  2.  New York Life; 7. Met Life; 8. Aegon (former structured settlement annuity issuer with business on the books through Transamerica, Monumental et al.); and 10. Aviva

Rankings of the property and caualty insurers in the Fortune survey whose subsidiaries issue structured settlement annuities or are former structured settlement annuity issuers

1. Berkshire Hathaway (includes former periodic payment reinsurer, National Indemnity) 2. Hartford Financial; 3. AIG (includes American General, AI Life and ALICO in UK); 5. Liberty Mutual; and 6. Allstate

** despite being unseated as #1 by its peers, NML still ranked in the broader ranking top 50 most admired companies which reflects a survey of executives in all industries in the Fortune survey.

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Allstate International Assignments, Ltd. is a new name for NABCO

by John Darer CLU ChFC CSSC

 

Allstate  Life Insurance Company announced the name for its NABCO Assignments, Ltd. facility has changed to Allstate International Assignments, Ltd. effective March 1, 2007. 

*****

Allstate International Assignments, Ltd. is a special purpose corporation formed for the purpose of accepting periodic payment obligations by way of non qualified assignments, including employment litigation settlements, divorce structured settlements, compromised workers compensation claims and Structured Installment Sales transactions and others. It is resident in Barbados and its transactions are governed by the Taxation Treaty between the United States and Barbados. It is registered with the IRS and holds a US Tax ID number.

 

*****

  The name change is a smart move by Allstate, clearly designed to take advantage of the power of the Allstate brand. Structured sales transactions stand to benefit the most by the name recognition. Selling homeowners contemplating a structured installment sale method to dispose of their property, in lieu of a 1031 Exchange,  may already have Allstate homeowners or car insurance. Structured installment sales may also be used as an exit strategy for business owners.

 

Need Structured Settlement Annuity Company Customer Service Numbers?

by John Darer® CLU ChFC MSSC RSP CLTC

4structures.com, LLC has a convenient listing of  Structured Settlement Annuity Issuers and Their Customer Service Telephone Numbers all in one spot.

The 4structures.com listing includes current structured settlement annuity issuers as well as those insurance companies no longer writing structured settlement annuities.

This is important because it is possible that a company, could have merged with another company, renamed,  or block of business could have been sold.

The list may be helpful to you if you already have a structured settlement, structured sale or structured attorney fee annuity and need some immediate help for:

1. Change of Beneficiary for your structured settlement or structured sale annuity payments
2. Change of Address for your structured settlement, structured sale or structured attorney fee payments
3. Change of Bank for the direct deposit or electronic funds transfer (EFT) of your structured settlement, structured sale or structured attorney fee payments.
4. Check the status on a payment that may have been lost in the mail.
5. Check to see when your next scheduled payment is due
6. Other general questions

Click the link to access the listing of Structured Settlement Annuity Issuers and Their Customer Service Telephone Numbers

If you still have a business relationship with the structured settlement broker or settlement planner who helped set up your structured settlement, or other qualified structured settlement brokers and settlement planners, they may also be able to help with additional financial needs you wish to discuss.

Proposed Private Annuity Regs Enhance Allure of Structured Sales

Today Allstate issued a memorandum to clarify confusion over the regulations recently issued by The United States Department of Treasury and the IRS over Private Annuity Trusts. Some, who have misinformed, thought the regulations applied to structured installment sales .

I discussed third party issues and concerns over Private Annuity Trusts in an earlier blog post for The Structured Sales Authority, including the June 4, 2006 Wall Street Journal article by Emma Silverman. It's important to note that demand for structured installment sales should actually be enhanced by the proposed Treasury and IRS regulations. Allstate stated that it continues to be committed to providing a structured sales facility through NABCO Assignments, Ltd.

For a more details of the Allstate memorandum, structured sales and discussion of consumer issues about certain websites advertising "insured structured sales" when what they are "selling" is not structured sales please visit The Structured Sales Authority or 4structures.com, LLC

Before You Spend That Lump Sum!

I often receive solicitations from the California Institute of Finance at California Lutheran University about its Financial Planning program. Today an excerpt from a Steve Vernon book caught my eye

"Don’t consider your lump sum as money you can spend in retirement. I know this sounds weird, but stay with me for awhile. My worry is that you might think you’ve got a lot of money, so you buy a new car, take lavish vacations, and before you know it, your resources have dwindled significantly. Instead, consider your lump sum as a generator of a monthly paycheck. Then, spend no more than this paycheck. We’re used to living paycheck-to-paycheck while we’re working, so let’s not stop this healthy behavior when we retire. To calculate your monthly retirement paycheck, use one of the tactics described below which minimize the chance of ruin (outliving your money)."

Steve Vernon  Live Long and Prosper, Invest in Happiness & Wealth for Retirement and Beyond (John Wiley, 2005)

Similar basic principles apply to many recipients of personal physical injury or sickness, workers compensation, or wrongful death settlements, or even the attorneys of such recipients with their attorney fees. We're not talking paycheck to paycheck as in "hand to mouth". What is being stated here is that lump sum settlement recipients may consume, or are tempted to consume an excessive amount of principal to the extent that they jeopardize their lifetime financial security. Steps can be taken up front via tax-free structured settlements, structured legal and attorney fees tax deferred income annuities, immediate annuities and other vehicles to protect such recipients.

Structured Sales facility now in place with Pruco Assignment Corporation

Back on May 1, 2006 I wrote a post to introduce Pruco Assignment Corporation, a new facility to take on non qualified assignment obligations. I learned at the NSSTA Regional meeting that Pruco Assignment Corporation will now accept non qualified assignments for Structured Installment Sales. The company plans a formal announcement shortly. A new entrant to the structured sale annuity market is welcome as it adds even greater credibility to along with the market competition.

Structured sales are an increasingly popular secure version of the installment method to dispose of highly appreciated real estate and business interests. For more information please visit The Structured Sales Authority or contact me

Met Life New Ad Campaign Makes Sense

MetLife has a creative new ad campaign.

Life, if belongs to you. Replace today's uncertainties with certainties. Guarantees for the if in life

Clearly insurance is all about risk. Some don't like paying premiums because they don't think they'll ever get hurt, be in an accident, ever need long term care, die too soon, outlive their assets, or think they'll do better in the stock market. The point of the MetLife ad and this post is that you control your own risk management.

Examples of Life Risk Management "Ifs" that You Can Control

Long Term Care I've had Long Term Care insurance ("LTC") for 7 years. Doing what I do for a living one can't help but become acutely aware of the cost of long term care. While the perception of many people is that LTC is for the elderly, nursing homes and Alzheimer's, if you are in an accident you may need it well before you get to old age. Setting aside the fact that its cheaper to buy it when you're younger, if you are rendered paralyzed or suffer a traumatic brain injury in an accident with someone who has $50,000 limits and no assets you may be limited to the limits of your underinsured motorists coverage. Heavy medical bills could drain your assets and your and/or your family's financial security. The lifetime costs could be in the millions! The $83.64/month I am paying initially gave me $200/day of lifetime coverage, which has increased with a 5% COLA to $268/day. That's almost $98,000 a year plus 5% COLA that doesn't come out of my pocket if the big if becomes reality. A cheap price to pay to replace the uncertainty of the exposure with a guarantee.

Disability or Sickness How long could you go without a paycheck? If the answer is not very long you need disability coverage. Say you're 45 and you expect to work another 20 years, here are your lifetime earnings at various levels (assuming your income increases 5% each year):

• $100,000/year incr. 5%  means  $  3,306,595 over 20 years
• $150,000/year incr. 5% means   $  4,959,893 over 20 years
• $350,000/year incr. 5% means   $11,573,084 over 20 years

The cost of disability insurance is a fraction of the lifetime exposure to satisfy the big if

The sad thing about Long Term Care Insurance, Life insurance and Disability Insurance is that if you avoid it now and then you need it you may not be able to qualify for it. Adverse medical history impacts your ability to solve these uncertainties through buying coverage at a time when the if becomes reality.

Annuities answer the longevity "if"-having the potential problem of outliving your assets. An annuity is the only vehicle that can contractually guarantee lifetime income, even if that means to over age 100!

• Structured settlement annuities solve many ifs for injured parties and survivors.
• Structured sales annuities through a structured sale transaction help mitigate upfront capital gains exposure.
• Annuities in a divorce scenario can bridge gaps and provide a means to secure alimony and child support.
• Deferred income annuities permit average Joes like you and I to buy future income to eliminate uncertainty.

Most People Have Trouble Estimating Appropriate Spending Levels

by John Darer

Most people have problem determining appropriate long term spending levels. Lack of education on the subject is clearly the root of the problem. Yet if left uncorrected, the long term ramifications of this deficiency could be a devastating impact on retirement, critical care or survivor financial security.

According to a survey** conducted on behalf of New York Life Insurance Company released in May 2006, nearly half of the Americans surveyed between the ages of 41 and 92 overestimated the percentage of their assets that they could safely withdraw annually without running out of money ("the safe withdrawal rate").  While published reports say that experts benchmark at 4% annually for the typical retiree, a surprising 40% of respondents to the New York Life commissioned survey admitted that they do not know how much to withdraw without spending down their savings. The study demonstrated that there is a great risk among the 29% of all respondents who believe they can spend 10% or more of their savings each year. Wow! 40% apparently haven't a clue and 29% apparently overestimate! Such retirees risk dissipation of their assets at a time when life expectancies are increasing!

The same principles apply to claimants or plaintiffs settling a medical or hospital malpractice, construction accident, airline crash, automobile accident, trucking accident, mesothelioma, product liability or other personal physical injury claim or lawsuit. A structured settlement should always be considered as part of the resolution of their case as a financial vehicle to provide that stable base of (income) tax free income and/or future capital regardless of a plaintiff's level of investment sophistication.

Education and implementation can be provided by experienced and credentialed structured settlement brokers, settlement planners and financial advisers familiar with such matters.

**The survey examined the retirement planning attitudes and behaviors of 1,002 financial decision-makers with assets of over $100,000, ages 41 and over, with a particular focus on income in retirement.