STRUCTURE ALERT: Gov. Schwarzenegger Signs SB 1408

STRUCTURE ALERT: Gov. Schwarzenegger Signs SB 1408

CLHIGA Limits for Structured Settlements Increased to $250,000

In a move long overdue in the eyes of many, Gov. Arnold Schwarzenegger signed Senate Bill No. 1408 into California Law last weekend. The bill was sent to the Secretary of State on Monday, September 27, 2010.

This is welcome news for recipients of structured settlement benefits and those contemplating annuity purchases!

The move, an effort by the legislature to modernize existing insurance law to more closely align with the National Association of Insurance Commissioners (NAIC) Model Law, was introduced last February and has been moving through the legislative process since then without a lot of fanfare and with overwhelming support of elected officials from both parties.

Among the highlights, this bill:

  • Increases the coverage limit for annuities and structured settlements from $100,000 to $250,000;
  • Clarifies and extends the coverage of structured settlements for California residents, even if the owner of the structured settlement annuity is resident of another state.

In its background summary, the bill’s authors observed that:

“In the current economic environment, the relative importance of annuities for those who own them has increased in importance.”

 

“Annuities are the only financial instruments available today, other than Social Security and pensions, that offer a guaranteed lifetime stream of income during retirement. Along with giving retirees the peace of mind that comes from knowing that they will not outlive their assets, annuities provide another important benefit, a way to increase current income.”

“This ability of annuities to provide a guaranteed stream of income makes their strength, and reliability, highly important in this period when many other investments have suffered serious declines in value and other setbacks.”

A copy of the Legislative Counsel’s Digest can be found HERE.

This move by California is similar to efforts by other states to bring their Guarantee Funds up to date.

The Finn Financial Group, whose mission is to help people achieve financial stability in their lives, is pleased to be able to report this positive development to you. The life insurers we represent average 119 years in business and we believe that’s a pretty good track record. But just to give people added comfort, we view this move by the California legislature as good for consumers and commend its authors and sponsors for their efforts.

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