Promoters selling structured settlement payment rights intentionally mislabeled annuities, may be duping investors into believing that the "annuity imposters" may enable the investor to receive State Guaranty Fund coverage in the event the underlying insurer is liquidated . Usually the promoter's sales pitch includes the weak disclaimer that "they make no promises in this regard". It's like " you didn't hear it from me but..."

The June 2020 State Legislative Brief published by the National Association of Insurance Commissioners ("NAIC") stated that "the guaranty association system ensures that consumers can purchase insurance products with the knowledge that their coverage will be protected in the event of a future company failure or insolvency. In order to ensure policyholders are adequately protected from such failures, in December 2017, the NAIC adopted revisions to the NAIC Life and Health Insurance Guaranty Association Model Act (#520) to address issues and concerns with guaranty fund coverage and assessments for any future Long Term Care Insurance (LTCI) insolvencies.Industry groups support these amendments and worked cooperatively with regulators on them".

Section 3 A (5) of the Life and Health Insurance Guaranty Association Model Act (#520) states:

This Act shall not provide coverage to :

(a)    A person who is a payee (or beneficiary) of a contract owner resident of this State, if the payee (or beneficiary) is afforded any coverage by the association of another State; or

(b)    A person covered under Paragraph (3) of this subsection, if any coverage is provided by the association of another State to the person; or 

(c)    A  person  who  acquires  rights  to  receive  payments  through  a structured  settlement factoring transaction as defined in 26 U.S.C. 5891(c)(3)(A), regardless of whether the transaction occurred before or after such section became effective.

AS of August 2023,  40 states have adopted the new revisions ( AK, AR, AZ, CT, DE, FL, IA, ID, IL, IN, KY, LA, MD, ME, MN, MO, MS, MT,NC,ND,NE,NH, NJ, NV,OK,SC,TN,TX,UT,VA, WA, WV, WY. District of Columbia and others

Some settlement planners have actively pushed (some are actively pushing)  factored structured settlement payment streams to plaintiffs in personal injury settlements, through independent assignment companies or investments for the plaintiff's Settlement Preservation Trusts,  and to trial lawyers for attorney fee deferrals . In a June 17, 2013 settlement petition to an Arizona court, which I reported about on my Structured Settlement Watchdog blog,  I reported how a settlement planner had apparently advocated for the use of what is mislabeled " secondary market annuities" for a minor Arizona plaintiff, to compete with structured settlement annuities .  I opined in my commentary, that structured settlement payment rights, which are not annuities (and not regulated insurance products),  and were represented to an Arizona judge as 'annuities", is misleading to the Court. The original petition in the matter of In Re Conservatorship of T.S. 1300GC2013 00063  Superior CT AZ Yavapai County also falsely stated to the court that annuities issued from the secondary market are issued by Liberty Mutual.  Saw a similar thing on a qualified assignment in a New York case where the purported "qualified assignment" said the annuity issuer was MetLife. Acquired structured settlement payment rights are not annuities and therefore the statement is false on its face.  Even, if arguendo the statement were true, Liberty did not issue annuities in the secondary market.

Subsequent to the settlement planner's representations to the Court, Arizona adopted the revisions to the Model Act (#520) in §20-682D. The relevant exclusion paragraph reads as follows:

"14. Structured settlement annuity benefits to which a payee or beneficiary has transferred the payee’s or beneficiary’s rights in a structured settlement factoring transaction as defined in 26 United States code section 5891(c)(3)(A), regardless of whether the transaction occurred before or after that section became effective "

Furthermore , the National Association of Insurance Commissioners December 2018 Statutory Issue Paper No.160 makes it clear that factored settlement payment streams are not annuities or insurance products.

We continue to encourage National Association of Insurance Commissioners to scrutinize the activities of licensed insurance agents and entities, as well as unlicensed promoters , who (1) misuse the term annuity to insinuate an insurance product while selling factored structured settlement payment streams. They may have even used insurance company logos to proliferate the falsehood 2) insinuate statutory insurance protections in their websites and/or marketing materials in their solicitation of investors, in conflict with prohibitions on such activity contained in state insurance laws.