by Structured Settlement Watchdog
The legitimacy of using the term annuity to describe factored structured settlement payments has been questioned for more than a decade. It may surprise some, but one company made a good faith effort to tell it like it is.
Here is an excerpt from an ad from a tertiary marketer in 2009. The 2008-2009 financial crisis stifled institutional financing to the structrued settlement secondary market and this "liquidity crisis", led to some transferrees in the secondary market seeking funding from individuals, such as Mom & Pops.
- "For a limited time there is a finite supply available to the retail marketplace.
- Compared with other products these In-Force Annuities are created as a result of specific court orders.
- Ownership of the annuity payment(s) provides a superior income stream that is extremely secure.
- Since this is not an insurance transaction it does not require an insurance license or any other license.
- The reason for this because it is factoring which is a sale of receivables.
- The player included a link from The Cornell School of Law and Wikipedia for an interesting historical perspective of factoring and Internal Revenue Code 5891. The link for that is here: http://en.wikipedia.org/wiki/Structured_settlement_factoring_transaction
If you go to Google and type in factor transactions you will get more pages than you care to read" they said.
Contrast that with the sematics of comparing a sap sucker with its Latin name. In defense of their usage of annuity, others attempt to justify it by citing Aunt Merriam Webster to describe and market the receivables.