by Structured Settlement Watchdog™
A structured settlement annuitant who sold half his structured settlement payments to a South Florida cash now pusher, was subject to a payment servicing agreement that has unfortunately resulted in a payment delay of 15 days and counting.
What is Structured Settlement Payment Servicing? When is Payment Servicing Necessary?
A payment servicing agreement is only necessary when a person sells part of their structured settlement payment rights, and the structured settlement annuity issuer will not "dice" payments. For example, the annuitant contracted to receive $1,000 per month when he settled his personal injury case . The structured settlement was funded with an annuity issued by a life insurer that will not "dice payments. Some years down the road, the annuitant sold $500 per month of his $1,000 per month payments, but since the insurer would not dice payments, the full $1,000 per month had to go to the servicing company, each month, where it would be "diced" and then each month distributed $500 to the annuitant and $500 to the investor in the structured settlement payment rights to the sold $500 per month.
Sometimes the settlement purchaser is the servicer. But things may get more complicated if the structured settlement payment rights are securitized or sold on. It is then possible yet another company could be the servicer!
I received a call today from the annuitant whose first call was to the life insurance company that issued the structured settlement annuity. He was told by the insurance company that they could not help him because the payments were being paid to company in New York. That company was splitting the payments and then making a direct deposit into the annuitants account using a code name.
This guy did not have a contact, the annuity issuer would/could not help him because a servicing agreement was in place. Again payments were 15 days late as of this morning! Fortunately for him I asked him which company he sold to and although he couldn't remember the name he knew the geography. So we played "name that cash now pusher" until something seemed familiar. In the meantime I contacted a representative from the servicing company that was
Payment Servicing Dilutes Insurer Branding and Cedes the Message to the Payment Servicer
Life insurance companies surrender their brand to the settlement purchaser or its servicer when they don't dice payments. Consider that a monthly structured settlement annuity with 20 years remaining equals 240 more opportunities to get your brand in front of the customer. How about a lifetime annuity? Even if the payments are made by direct deposit your brand is on the payment advice, even if abbreviated. The annuitant in question receives a payment from the servicer with a meaningless 4 letter code followed by a 4 number code.
I have spoken to a manager at the annuity issuer in question to make them aware of the consequences of a servicing agreement. The name is not important to this discussion, since a number of annuity issuers will not dice payments. Isn't there an efficient way for non-dicing annuity issuers to service customers who need partial liquidiity, who may be prospects for other products or services offered by the insurer?
Important Tips for Sellers and Investors
- Partial sellers should keep the contact information for the servicing company with their important papers.
- Investors in structured settlement payment rights should determine before making a purchase whether or not payments are being serviced and if so, obtain direct contact information.