The Finn Blog

Both Sides, Now . . . and Later

Angel HairI’ve looked at life from both sides now from win and lose and still somehow it’s life’s illusions I recall.

I really don’t know life at all.

August 29, 2014 – Almost fifty years ago, a blossoming 24-year old singer songwriter just a few years removed from her Saskatchewan homeland, wrote a song which would go on to rank, at No. 171, among the greatest songs of all time according to Rolling Stone.

Joni Mitchell says she drew inspiration for “Both Sides, Now” while on a plane reading Saul Bellow’s Henderson the Rain King and looking out the window at the clouds.  But I’m not convinced she wasn’t actually reading a copy of Vaughn & Vaughn’s Fundamentals of Risk and Insurance instead.

(Stay with me. You’ll understand the connection in a bit.)

After all, insurance is all about risk management and people paying money for protection.

They pay money for a life insurance policy that promises heirs will be compensated should an untimely death occur;

They pay a lump sum of cash in exchange for an annuity which promises guaranteed future lifetime income to protect them against the risk of running out of money in old age.

But before handing over any sum of cash for something as seemingly nebulous as an insurance promise, safety minded consumers usually need a key question answered first:

“How SAFE is my money?”

In a word, “VERY!”  

Even if we limit our focus to the worst financial catastrophe in recent memory, the Great Recession years of 2008-2011, you can’t help feeling secure about the safety of your purchase after considering these few facts:

FACT No. 1:  According to the National Organization of Life and Health Insurance Guaranty Associations (NOLHGA), only 8 life insurers were placed in liquidation during this time.

FACT No. 2:  Compare that to the 415 bank failures occurring during the same time period according to the Federal Deposit Insurance Corporation’s Failed Bank List.

Yet despite a superior track record, many people still avoid life insurers because they perceive banks to be the less risky choice.  These folks, like the song says, “really don’t know life (insurance) at all.”

This is where we circle back to Joni Mitchell because one of the most under-appreciated realities of life insurer’s business model lies in how they manage their risk.

Few people take the time to realize that life insurers, quite literally, look at life from both sides, now!  At least their actuaries do.

Consider this:

Every term life insurance policy is effectively a “bet” between you and the life insurance company about how long you will live.

That risk is priced according to the actuarial projections (i.e. “odds”) of you living beyond your normal life expectancy (NLE).

Same is true with annuities.  Except in reverse.  Here, you are betting you will “beat” the odds and live beyond your NLE.

But either way the life insurer’s chances of solvency (or, honoring their promise to you) are enhanced because they have you covered on both sides.  This is a big plus for consumer security.

Think about it:  For every life insurance policy that’s a “win” for them (i.e. they don’t have to pay out any death benefit proceeds) because a person lives longer than projected, there’s another person in their pool with an annuity who also lives a long life and the insurer “loses” because they are obligated to keep paying benefits.

In a way, the life insurer is “betting” on both teams where both teams win!

Extrapolate this across a large enough pool of policyholders underwritten by a highly rated life insurer with years of experience and you have a reasonably good assurance the life company will deliver on its promise.

In other words, your money is safe.

CAVEAT Understand that this general information does not extend to every single insurer and consumers still need to do their own due diligence on the solvency and viability of any individual life insurance purchase.  But as an industry, it’s got a great track record.

So whether you’re considering a structured settlement, retirement annuity, life insurance policy or any of a host of other offerings from this stable industry, remember how good your chances are.

Don’t let the clouds get in your way.

Structured Settlement Talk: ABA Journal’s Film Feature Misses One

August 4, 2014 – This month’s ABA Journal has a very engaging cover story about lawyers in movies guaranteed to evoke a few good motion picture memories.

Who among us hasn’t borrowed Joe Pesci’s “two Utes” line at least once?

But as much fun as “12 movies with pivotal lessons featuring lawyers” was to read, the magazine omitted one I would have liked to have seen included:

1998′s A Civil Action.

The film recounts the case of Anderson v Cryovac and the ensuing litigation over alleged leukemia-causing water contamination.

There are several important lessons for lawyers contained in this terrific courtroom drama. (“You don’t change your socks in the middle of the World Series.”)

But the scene that caught my structured settlement attention was the one where settlement discussions break down simply because the negotiating lawyers failed to fully appreciate, or even recognize, the dual concepts of present and future value.

So potent is this particular excerpt in dramatizing the subject that it has been a staple of mine for years in structured settlement training seminars I’ve conducted for lawyers and claims professionals.

Rather than recount the important scene itself again for you here, I’ll simply redirect you to an earlier post on the subject where you can can judge for yourself whether or not this film merits inclusion:

Click title: It’s Oscar Time!

If you somehow missed A Civil Action during its initial run, it still holds up very well and I highly recommend it.  Robert Duvall is always hard to beat and you’ll even get to see a pre-Tony Soprano James Gandolfini featured in a prominent role.

Got a favorite movie containing lessons for lawyers you think should be included? We’re always interested in ones we might have missed so be sure to let us hear your thoughts on the subject.

Annuities: The Volatility Antidote

Bull_Head_clip_art_mediumJuly 14, 2014 – 2013 was a dream year for most people invested in the stock market.

And with the bulls still running so far in 2014, people are left wondering just how long King Midas’ reign over Wall Street will last.

But every realist understands the bears will return someday once volatility rears its anxiety-inducing head.

This was actually supposed to be a very volatile year for stocks but so far, not too shabby.

Bear_Head_clip_art_mediumBut we’re only at the half-way point so choppy waters could still be in the forecast.

In and of itself, volatility is not necessarily a bad thing. A pretty normal occurrence from time to time, actually. And since stocks usually work out best for those with longer time horizons, most investors should still be okay in the long run.

Unless, of course, all their eggs are in one basket and they’re going to need some of those eggs to live off of.

Structured Settlements

When someone settles a personal injury claim, they are frequently offered the option of receiving some of their settlement proceeds in tax-advantaged guaranteed future cash flows designed to coincide with future needs.

You know this as a structured settlement.

Despite the many obvious advantages of structured settlements, many succumb to the allure of a stock market that most recently earned 30% and take their entire settlement in cash with visions of compounding dancing in their heads.

But what if their settlement is supposed to compensate them for their compromised work life expectancy? A bad year or two in the stock market later and they are left with fewer dollars to support themselves.

Depending on the age and individual circumstances of the client, most structured settlement professionals (including yours truly) will usually recommend a combination of structured settlement (to address the non-discretionary needs) and cash.

This is where it starts getting counterintuitive.

Those who take the time to secure their foundation with a structured settlement are actually better positioned to ride out the markets swings which take their toll on people who are not as diversified.

Because basic needs are addressed with the structured settlement, clients can actually feel confident taking on more risk in stocks with their cash and can stare down the big, bad volatility boogeyman with a good chance of coming out on top in the end.

So go ahead. Put some of your settlement aside to invest in the stock market if you like. If your time horizon is long enough, you’ve got a pretty good chance of coming out on top

Just make sure you secure your future with a structured settlement first.

Otherwise volatility might get the better of you AND your money.

Structured Settlement Security

July 12, 2014 – In a world where security means everything and often seems in short supply, it’s reassuring to know the life companies currently offering structured settlements have all retained their “secure” ratings even throughout the dog days of The Great Recession.

And every single one of them is still going strong!

When one’s financial life is turned upside down, the memory of catastrophic financial loss can linger even after portfolio balances rebound.

Who can blame somebody for still feeling anxious about the future?

But for those with promised structured settlement payments from the current crop of life markets offering them, anxiety need not be a concern.

Structured settlement recipients have many reasons to feel secure.

Time, Money and Security

Which makes the current issue of Best’s Review, touted on its cover as “The Leaders Issue” providing its annual rankings of insurance companies in a variety of different categories, so noteworthy.

Silver_clockOf special interest to us and our clients is its cover story “Standing the Test of Time” which highlights the consistency with which several life insurers have maintained an A or better rating from “the world’s oldest and most authoritative insurance rating and information source” – A.M. Best Company – for a significant period of time.

Three structured settlement life markets have maintained a rating of A or better for more than 75 years (current rating in parentheses).  Listed here alphabetically, they are:

Metropolitan Life Insurance Company (A+)

New York Life Insurance Company (A++)

Prudential Insurance Company of America (A+)

These three excellent markets have held their A or better ratings since 1928 and are three of only twelve companies so honored.

In the A or better for at least 50 years category, we pick up two more terrific structured settlement providers:

Pacific Life Insurance Company (A+)

United of Omaha Life Insurance Company (A+)

With A or better ratings since 1959 and 1956 respectively, these two markets have also demonstrated consistency.

Current non-exclusive providers of structured settlements that don’t make either of these lists but are also strong and remain fully committed to meeting their future obligations are:

American General Life Insurance Company (A)

Berkshire Hathaway Life Insurance Company of Nebraska (A++)

Liberty Life Assurance Company of Boston (A)

With tie-ins to major casualty companies and significant financial strength in their own right, these last three are still on our “hot” list of companies we’re proud to represent.

But the good news doesn’t stop there.

When ranked by admitted assets, half of these companies – Metropolitan (1), Prudential (2), American General’s parent AIG Life (4) and New York Life (6) – are in the Top Ten of U.S. Life Insurers.

Put it all together and you’ve got a recipe for major financial safety, security and success.

Only the best of the (A.M.) Best offer structured settlements.

With guaranteed, tax-advantaged future cash flows that are safe and secure, structured settlements have been anchoring our clients’ futures for years.

Congratulations to all our life company partners on their success.  Here’s to the next 75 years and beyond.

Treasury Green Lights New Retirement Safety Net Option

July 1, 2014 – Your retirement safety net options just got a whole lot better.

Effective today, 401(k) plan participants now can choose to dedicate a portion of their retirement funds toward the purchase of “longevity insurance,” otherwise known as a deferred income annuity, in an effort to shore up their retirement security.

Here’s a good summary of what’s taken place from today’s New York Times.

These final rules now permit individuals to hedge their bet against one of the greatest risks to their retirement security - running out of money!

woman_and_bicycleBecause the road of life is of unknown distance making it critical to prepare for what’s around the next turn, prudent travelers will want to make sure they pack enough money for their journey so they can pay whatever tolls they might encounter along the way.

It’s especially critical to make sure you have enough funds for later on down the road when other cash resources may have been used up.

Social Security helps by providing you with income you can never outlive.

Pensions, once the staple of the American workforce but now nearly extinct, do the same.

But beyond that, conventional retirement planning leaves it up to you to be smart enough or lucky enough to manage your accumulated wealth in such a way that it will sustain you throughout your retirement.

Many financial professionals recommend planning on spending down your wealth over a thirty, sometimes forty, year time period.

There’s one major problem with this approach:

You don’t know how long you’re going to live.

What if you hit the 30-year or 40-year mark and are still kicking?

Wouldn’t having a little extra “just in case” security help you sleep a little bit better at night?

Longevity insurance helps solve this problem and these new Treasury rules make it possible for you to create your own pension-like cash flows you can never outlive.

Let us know how we can help!  We’re happy to assist you with creating your own safety net with any retirement funds you want to set aside to secure your future.

By allocating as little as ten percent of your funds, you can create a future security blanket that will give added assurance that you can take care of yourself in your later years.

Fad soal agat!

Quantifying Life

June 4, 2014 – When I began my insurance career more than thirty years ago, I started out as a Homeowners Claims Examiner.

Then, as today, the job involved investigating a policyholder’s claim for damages and, once coverage was verified, paying the claim subject to any limitations, policy provisions and company procedures.

If hail damaged a policyholder’s roof, it was fairly easy to ascertain that claim’s value since contractors usually charge the same amount of money for any given job give or take.

Square footage times price per square foot equals value of claim.

If a policyholder had a television set or audio equipment stolen during a burglary, pricing suitable replacements was equally straightforward.

While there might be occasional points of disagreement, generally the insureds were satisfied with their resolution since they had many reference points for valuing tangible items.

They knew what it would cost them to buy a suitable replacement in the marketplace.

dead_roses_202803When it comes to placing value on human life following a covered liability loss, however, the claims professional’s job is significantly more daunting.

Marketplaces for replacement people do not exist and placing value on sorrow is an infinitely less precise task.

Catastrophic claims involving high profile litigation where large numbers of plaintiffs are involved pose special challenges and often involve the services of a “special master” – an authority appointed by a judge to ensure rules and orders are followed and parity is achieved – to dispense settlement funds.

Today’s CNNMoney article about the recent General Motors Recall highlights some of the challenges the special master can face.

When an accident results in the loss of life, structured settlements are a superior method of providing aid and comfort to the survivors.

While no amount of money can ever adequately compensate someone for the loss of someone dear, structured settlements can, at a minimum, permit some semblance of financial normalcy following the tragedy.

If the decedent was the principal wage earner for the family, arranging for cash flows to replace lost income can help ease some of the stress the family will face moving forward.

Structured settlements can also even help prevent a second catastrophe from occurring.

The dangers of large cash lump sums awards are well documented.  Simply put, when money is available, the temptation to spend it is often too great to resist.

Add to that the guilt many people feel for having money when a loved one was killed and emotions can overwhelm a person rendering sound decision making problematic.

Take the New York Post story from 2005 about Kathy Trant – a 9/11 widow who, in less than four years, burned through nearly $5 million in donations and Victims Compensation Fund proceeds.

Fortunately, most of us will never be in a position to know how we might respond under similar circumstances.

Sadly, though, the world is imperfect and people sometimes die from injuries sustained in an accident leaving behind survivors tasked with the charge of continuing on.

Our jobs as claims, settlement consulting and legal professionals is to do everything possible to ensure survivors are fairly compensated for their losses.

Fortunately structured settlements are available to aid us in helping clients make that difficult transition to life after such devastating losses.

With unique features that provide guaranteed income which is 100% tax-free with no management fees or expenses, structured settlements are the ideal choice for these types of claims.

Structured settlements won’t bring someone back.  But they help honor the memory of those lost and should be considered on claims involving fatalities.

$2.5 Billion DePuy ASR Hip Settlement Accepted

Hip RecallMay 16, 2014 – The law firm responsible for filing the very first law suit in the nation against DePuy Orthopaedics alleging an artificial metal-on-metal hip the company manufactured was defective, announced today that the landmark $2.5 billion settlement negotiated last November has been accepted by the required number of plaintiffs and can now proceed.

Walkup, Melodia, Kelly & Schoenberger issued a press release today announcing details of this development.

Our firm has been closely monitoring this particular litigation since its inception for a variety of personal and professional reasons.

We established a companion website more than three years ago dedicated to helping this special class of plaintiffs with whom we feel a special connection.

If you or anyone you know is a member of this settling class or to learn more about our interest and ability to help, please visit our companion website at:


With much of the DePuy ASR hip settlement litigation drawing to a close, now is the time to ensure your last step is the one that’s right for you.

For many, an all cash settlement will make the most sense.

But others will want to take advantage of a unique settlement opportunity not available to the general public.

Those who opt for the latter can arrange to structure all or part of their recovery in such a way that guaranteed future income – which is 100% tax-free – will be paid to them according to a schedule they choose.

Many will find this structured settlement method preferable for its safety, security, tax efficiency, competitive relative rate of return and ease of use.

IMPORTANT:   Certain tax code restrictions and limitations exist so it’s vital for clients to understand their options before taking receipt of any settlement funds. 

We’re here to help.  Call today for a confidential, no cost, no obligation consultation about your settlement.

We understand what you’ve been through and look forward to helping you make the right choice about your DePuy ASR hip settlement.

Law Day, USA

May 1, 2014 - Today our firm celebrates Law Day in honor of our many friends, clients and business partners who serve in the legal, insurance and law enforcement communities and related fields.

Some excerpts from Public Law 87-20

Law Day” … a special day of celebration by the people of the United States …

… in appreciation of their liberties and the reaffirmation of their loyalty to the United States and of their rededication to the ideals of equality and justice under law in their relations with each other and with other countries; …

… for the cultivation of the respect for law that is so vital to the democratic way of life …

… inviting the people of the United States to observe Law Day, U.S.A., with appropriate ceremonies and in other appropriate ways, through public entities and private organizations and in schools and other suitable places.”

Happy Law Day to all.

Promising Research for Spinal Cord Injuries

surgery_operation_hospitalApril 8, 201 4 – According to the National Spinal Cord Injury Statistical Center, approximately 12,000 new cases of spinal cord injury (SCI) are reported each year with motor vehicle crashes accounting for a plurality of those reported since 2010 (36.5%).

In what is being heralded today as a major scientific breakthrough, paralyzed patients may have reason to hope they may some day walk again.

You will be absolutely amazed when you see this CNN Health video that accompanies the attached article. Surgery

Those seeking a deeper, more technical analysis of the subject may wish to seek out a copy of today’s issue of Brain where they can read “Altering spinal cord excitability enables voluntary movements after chronic complete paralysis in humans.”

As a settlement planning specialist, I am often called upon to design cash flows which coincide with life care needs of those whose mobility limitations are the result of a motor vehicle accident and who need to make a personal injury settlement last a lifetime.

And thanks to news like this, that lifetime just got a little bit brighter.

Congratulations to the amazing researchers and the funding that supports them for this exciting development which we will continue watching with great personal and professional interest.

Life Expectancy Calculator

April 7, 2014 – If you’re tired of those boring life expectancy tables that lump everyone into two categories – male and female – to estimate how long you’re most likely going to live, have we got a calculator for you.

Old_ManThe Living to 100 Life Expectancy Calculator is a free online, interactive tool which factors users’ responses to questions about family history, medical data, eating and social habits and so on to formulate a more individualized life expectancy estimate tailored to the input provided.

In addition to helping people see what their present statistical life expectancy might be, the calculator can serve as a “To Do’ list for people seeking to modify their lifestyle choices in hopes of improving longevity.

It can also serve as a wake-up call for those who don’t fully appreciate the longevity risk we all face.

(That’s why the guy in the purple sweater above looks so grumpy.  He failed to plan for the possibility of a long life.)

Only Social Security, pension income and life annuities can assure cash flow throughout life regardless of life expectancy.

You probably will receive Social Security.

You possibly have a pension.

But even if you have both, you almost certainly could benefit from purchasing some additional life annuity longevity protection with your retirement proceeds.

Although it’s been almost a decade since this website landed on Time magazine’s list of “50 Coolest” sites, we think it’s still pretty neat and hope you enjoy trying it out for yourself.

Then, when you realize you’re likely to be around a lot longer than you realized, give us a a call so we can help you analyze your unique situation and plan your transition to retirement so you won’t run out of money.