Annuity Settlement Safe?

[JessiesGirl]

What is the name of your state (only U.S. law)? Arizona

Hi,

I won a medmal case in December 2006 for a traumatic brain injury, with payments to start January 2009. There are 32 years of payments, and 3 lump sum payments set up in my contract.

With the economy being as awful as it is, how safe is my annuity from being lost? It's through MetLife, and my hubby and I have tried to scrutinize the policy, and have not seen any language to assure us we won't lose our only supposedly secure source of money. The money is meant for my future medical and lost wages (I truly am disabled). My hubby lost his job in July and we are strapped right now (who isn't??). I'd be devastated if this annuity disappears. My grandparents suggested we call MetLife but they cannot say whether it is insured, and there is over $1.2 million at stake (over the course of the 32 years). My medmal atty said he has no contractual relationship with MetLife so he cannot answer my questions, although he understands our concerns.

How can I find out if my annuity is safe/insured? And if it IS safe, what options do I have as recourse if I find out later all my money is gone? Does FDIC cover this type of thing? See, if my recourse is to sue if I lose the money (if that's even an option, who knows), then if I win, so what? I still won't have the money b/c MetLife won't have it, right????

Sorry if I posted this in the wrong website or forum, its just been a lot of sleepless nights worrying that my family's future is tanked...

Thanks in advance for any input/insight.

K

 

[seniorjudge]

If we could answer your questions, we'd be working for AIG and partying on the taxpayers' money.

Good luck.

 

[JessiesGirl]

Well, I was afraid of that. Keeping our fingers crossed is apparently our only option. Ick. Oh well. Thanks for letting me know. I am glad a respected senior member answered; I know the answer is correct.

 

[You Are Guilty]

I can't speak specifically for Arizona, but its doubtful there is any insurance (much less via the FDIC) for an annuity. Go through your settlement papers and you'll likely see some language in there about the defendant being required to "purchase an annuity for XX years, producing an income stream of $YY, from an insurance company rated A++ or higher...", or something similar. The rating requirement is there in an attempt to mitigate the exact problem you're worried about - the insurance company going under (or at least not being able to pay as obligated) before the annuity terminates.

I know there are places who will pay you cash up front in return for assigning your annuity's income stream to them, but particularly with the way the economy's been, I highly doubt they'll be offering a good deal. (But then again, anything is better than nothing, so keep it in mind if it starts to look bad for MetLife).

 

[JessiesGirl]

Thank you for the advice. Hubby and I are in the process now of transferring one of the lump sum payments that would have been paid in June 2010 and of the 4 companies I contacted, one actually gave me an amount to consider, and we are very pleased with the amount we will receive. Now just going to look for a suitable house, and pray the monthly settlement payments will be safe. I do have another question:

Why does a judge need to approve a transfer from an annuity? I mean, it's my money, and I didn't go to court; the case settled out of court (thankfully), so a court didn't have (in my opinion, I definitely could be wrong) as much work to do as if I had gone to trial...

I'm worried that a judge could deny the transfer. The company that I will probably work with said that if I had a real estate contract in hand when we go in front of the judge (to get the approval of the transfer) that the judge would probably approve it. Otherwise, they may not because they don't want people to cash their annuity in to high-tail it to Vegas. How is it their business what I do with my money anyway? Personally, I set up the lump sum payment for June 2010 to buy a house but knowing now that the annuity is not secure, and in the Phx market with so many forclosures, the purchase of a house with cash seems like a pretty wise move, so I'm just moving the date up 1.5 years. Why would a judge care? I do not mean to sound insulting; I am just curious.

Thanks for the advice. Have a good night!
Kathy

 

[You Are Guilty]

That's interesting. I did not know AZ required judicial approval for such a transfer for adults (they do for minors for what are obvious reasons). If I have time today, I'll double check the law to see if it's actually true - perhaps the transfer company is mistaken.

However, assuming the court does need to be consulted, it is probably because public policy dictates that seriously injured people should not be allowed to squander their settlement money, leaving them to rely on taxpayer-funded public assistance/medical care. (Look how many lottery winners end up on welfare just a short time after winning.) Since that's obviously not true in your case, I don't think you need to worry.

I do agree that having a signed contract would certainly bolster your case when seeking the court's permission.