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

John Hancock Life Introduces Structured Settlement Exchange Program for Its Annuitants

by John Darer® CLU ChFC MSSC CeFT RSP CLTC

John Hancock Life is rolling out a structured settlement exchange program that enables John Hancock annuitants to address their liquidity needs while providing a measure of protection against secondary market predators. 

The John Hancock Structured Settlement Exchange program is unique for being established at a time when John Hancock is not writing structured settlement annuities.  John Hancock ceased writing structured settlement annuities in 2013.

The John Hancock Structured Settlement Exchange program is similar to the Allstate AFEN program and Berkshire Hathaway's Hardship Exchange Program, at a discount rate that is competitive, but definitely not the lowest possible rate.

Always shop around. Selling structured settlement payments usually doesn't make sense for most people, but at least John Hancock Life annuitants who must go down that road, now have a ceiling above which they should not be paying to another structured settlement buyer.

 No John Hancock Life annuitant should pay more than 8% on any sale of structured settlement payments. 8%

Commutation programs are a source of consternation from structured settlement factoring companies who complain that it gives the annuity issuer an unfair advantage, while factoring companies must incur advertising expense to find prospects.

On the other hand one has to consider that the structured settlement factoring industry has no licensing requirement, unregulated sales practices and has an appalling history that has earned blistering exposes in national news media for member business practices (not to mention all the Structured Settlement Watchdog® has sniffed out). There are currently two ongoing lawsuits against life insurers for not doing enough for their annuitants when noticed of a structured settlement factoring transaction.  In my opinion offering a structured settlement exchange or hardship provision is smart business.

 

 

 

 

 

 

 

 

 

 

 

    

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Last updated October 1, 2024

Structured Settlements for CT Residents More Valuable Due to CT Income Tax Increase

by John Darer® CLU ChFC MSSC RSP  CLTC

Connecticut Budget bill (S.B. 1239), signed May 4, 2011  by Connecticut Governor Dan Malloy, will increase CT personal income tax rates retroactive to January 1, 2011

The new marginal income tax rates apply for those with taxable incomes of more than $100,000 for joint filers; $50,000 for single filers and married filing separately; and $80,000 for heads of households.  A legislative analysis of the budget, states S.B. 1239 does so by: 

• increasing the number of tax brackets from three to six;
• splitting the existing 5 percent bracket into four brackets and adding three higher marginal tax rates to that taxable income;
• increasing the top marginal income tax rate to 6.7 percent from 6.5 percent;
• and reducing the taxable income for the 6.7 percent rate bracket by half

The measure also phases out the lowest (3 percent) income tax bracket starting with Connecticut adjusted gross incomes of more than $100,500 for joint filers; $56,500 for singles; $78,500 for heads of household; and $50,250 for married couples filing separately.  The legislative analysis said it does so by subjecting increasingly less taxable income to the 3 percent income tax rate as Connecticut adjusted gross income increases and moving the phased-out taxable income to the 5 percent bracket.

Marginal increases in state income taxes increase the intrinsic value of a structured settlement, structured attorney fee or non qualified assignment  (taxable damage structured settlements) for Connecticut plaintiffs, CT claimants and CT Trial lawyers lawyers

Under current Federal tax law structured settlement payments that are for payment of damages for physical injury or physical sickness, or workers compensation,  are excluded from gross income under Section 104(a) of the Internal Revenue Code*.  There is also no state income tax for such payments. Structured attorney fees, employment structured settlements and other forms of non qualified structured settlements and assignments,  offer tax deferral options. 

For more details, contact  Connecticut settlement planning expert John Darer CLU ChFC MSSC  CeFT RSP at 203-325-8640

 

* Since 2016, Damages for wrongful imprisonment are also income tax free per IRC Section 139F. Wrongful imprisonment damages can be structured

Qualified Assignments 101, What is a Qualified Assignment?

by John Darer ® CLU ChFC MSSC CeFT® RSP CLTC

What is a qualified assignment?

A qualified assignment is a transfer of a contractual obligation to make future periodic payments under a settlement agreement, which satisfies the requirements of Internal Revenue Code (IRC) §130. In a structured settlement agreement the original obligor (the defendant, insurance carrier for the defendant, or the trustee of a IRC 468B qualified settlement fund, assigns its obligation to make the future periodic payments defined in the settlement agreement to a "qualified assignment company".

Only payments which represent damages for personal injury, physical sickness, wrongful death and payments for workers compensation may be assigned by way of a qualified assignment.

Generally a qualified assignment company is a special purpose company, which does little more than hold an annuity or United States Treasury obligations as a "qualified funding asset" to back up the obligations it assumes from Defendants, Insurers or qualified settlement fund trustee. A qualified assignment company may actually be an insurance company itself. When an annuity is used as a qualified funding asset, the qualified assignment company is usually related to the life insurance company issuing the structured settlement annuity. In such cases, the qualified assignment company typically purchases an annuity from the related life insurance company as a qualified funding asset pursuant to IRC 130(d).

A qualified assignment requires the plaintiff's consent.

The answer to the question "what is a qualified assignment" should be fundamental knowledge to ALL competent structured settlement consultants and users of structured settlements. It is a pity to see misinformation occasionally posted on the websites of some settlement consultants, or others, which state incorrectly (see below) that the qualified assignment is "to a financially secure insurance company", or "an assignment to the life company".

To wit... "From the plaintiff’s perspective, an assignment to a financially secure insurance company gives them the assurance that future payments will be made as promised. For many plaintiffs, this assignment to the life company alleviates the stress of future contact with the defendant, their insurer, or any party responsible for the injury"- quote from the  website of a veteran settlement consultant at time of original publication.

Of the primary companies offering structured settlements only the qualified assignment facility used by New York Life (New York Life Insurance and Annuity Corporation) is an insurance company. The qualified assignment companies of United States Life Insurance Company in the City of New York (including the former American International Life Assurance Company of New York), American General Life Insurance Company,  First Berkshire Hathaway Life Insurance Company, Berkshire Hathaway Life Insurance Company of Nebraska, Independent Life Insurance Company, Pacific Life Insurance Company,  Pacific Life & Annuity Company, Metropolitan Life Insurance Company,  Metropolitan Tower Life Insurance Company, The Prudential Insurance Company of America, United of Omaha Life Insurance Company and (i.e. the majority) ARE NOT life insurance companies or even insurance companies for that matter**.

Last updated December 5, 2022