Safety. Security. Solvency.

These “other three little words” that mean so much have taken on renewed importance this past year for anyone making decisions about their financial futures. “Winning” suddenly seems a whole lot less important than simply “Not Losing.” At least as far as account balances are concerned.

And since we no longer can take for granted these three fundamentals we’ve come to consider our financial birthright, I thought it worth taking a moment to reflect on the safety and security of some of the options people have available to them when choosing what to do with their settlement proceeds. So with football season upon us, what better way to illustrate the distinctions between choices than with a . . .

21st Century Security Scoreboard
Banks – 130
Structured Settlements – 0

“Wow!” you might say. “What a drubbing! The banks sure have dominated structured settlements this century!” And you would be right! You would be right, that is, provided you were keeping score on FAILURE!

Between October of 2000 and August 14, 2009, 130 banks have failed according to fdic.gov. Furthermore, an article in yesterday’s papers highlighted the negative impact this strain has had on the FDIC Reserve balances which have dropped dramatically since 2007.

So what does that goose egg up there on the scoreboard next to Structured Settlements mean? Right again! Not a single life insurer that offers structured settlement annuities has failed this century. That’s right. None. Zilch. Zippo. And unlike the zeroes on most scoreboards, this is a tally everyone can be proud of.

Structured Settlement Life Insurers have a long history of honoring the promises they make to accident victims. Further, over the past 20 years, the National Association of Insurance Commissioners developed several model laws and regulations designed to strengthen the states’ solvency monitoring capabilities.

And even though life insurers reported a collective net loss of $52 billion in 2008 (naic.org), it’s reassuring to know (to the extent an evaporating fifty-two billion dollars can ever be reassuring) this figure represents less than 2% of their TOTAL net assets. Suffice it to say, despite our current recession, these guys still have a lot of money!

While anything’s possible in the future, history is often a very good indicator of what to expect in the years to come. Since all of the companies offering structured settlements have endured hard times before, survived and even thrived, it’s reasonable to expect they will be there to make the payments they have promised.

And that’s more than many banks can say!