Annoyed At The JG Wentworth Commercial
I don’t think that I watch all that much television, but I keep seeing this commercial pop up that really bugs me. It’s a commercial for “J.G. Wentworth” where all these people stick their heads out of their respective windows and shout, “It’s my money and I want it now!” It’s annoying and repetitive. Then this old guy says that if you get regular annuity payments, they’ll be happy to exchange that into one lump sum for you. Why in the hell would you want to do that? The prospect of “instant cash” may seem like a good thing, but you would be shooting yourself in the foot if you did that.
I might be assuming that all people inherently know things that I take for granted, but isn’t it common knowledge that the value of an annuity is greater in the long term than in the short term? For example, let’s say that you win the lottery for a million dollars. You don’t actually have a million dollars. You have $300,000 that, if left in an interest-bearing account, will afford you regular payments that will equal a million dollars over the course of twenty years. If you decide to take the lump sum, you only get the original $300,000. Until the government takes their 25% in taxes and you settle your early withdrawal penalty of 10%.
So JG Wentworth wants to buy your annuity from you in exchange for that $300,000 (minus taxes, fees and their cut). If you do this, you now have about $200,000 to blow. Once you buy all your buddies new cars, you’re out of cash again within the year. “It’s my money and I want to spend it now!” Meanwhile, J.G. Wentworth is slowly cashing in your one million dollars worth of annuity payments, because they’re smart enough to be patient and let the power of compound interest work for them. They’re laughing all the way to the bank with your cash!
I might make an exception here for huge medical emergencies or catastrophic loss. If my house burned down with everything I owned inside it, I might have to cash out that annuity. Or if that lottery win was for a hundred million dollars, since I would settle for the lump sum payment of twenty million (how ridiculously rich do you have to be?). But given the status of things the way they are, I find that commercial offensive. It’s obviously targeting stupid people, playing on their greed and short-sightedness.
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Well, all the stupid people now know it was a mistake to buy into sub-prime mortgages… they have to be suckered into *something*.
Companies like this used to make millions paying lotto-winners lump sums for their winnings until the states figured out that it was an scheme that they could cash in on as well. I guess this is how they get by now.
It’s the American way: Hurt yourself doing something stupid. Sue the person who owned the object that hurt you or the land it was located on. Win big and pay a theives ransom to your shark lawyer whose company rhymes with “Nairobian Pliers”. Get a lump sum cash payout.
See, the system works.
Ehhh, there are legitimate reasons for it that don’t involve being a sucker.
For one thing, you may think you can manage your money better than whoever is running your annuity can. I’m going to leave aside for now whether or not you actually can handle it better, and we’ll just assume that you can. If you can get a 9% return on your cash, and Some Guy That Runs The Fund is only getting 5%, you may still come out ahead, even losing a fortune up front.
Especially if the state is involved. Do you really have full confidence that the state lottery commission can invest and maintain your money more effectively than you can?
For lotteries specifically – you’re also banking that the lotto is going to be around in 20 years to pay out the full thing. Say the lottery system collapses. Or there’s a huge budget crunch. Or the economy tanks. Or there’s a revolution. Yes, yes, I’m coming up with extremist nonsense to some extent, but personally I wouldn’t believe that the Mega Millions jackpot will be around for the next 30 years to pay it all out to me completely.
I’d rather take my money and run now than assume that some random fund is going to (a) manage it better than me and (b) still exist long enough to pay me.
Don’t get me wrong – for most people the lump sum may be bad news, and especially JG Wentworth here is effectively scamming, but it’s a case by case basis.
I believe we as the public should be able to sue JG Wentworth for subjugating the television viewing audience to their obnoxious commercials. They are our sensibilities, and I want them back Now!!
Amen on suing them for the most obnoxious commercials ever.
And I am with Jim. I would take the money and not an annuity if I won the lottery because I could turn more than the average schmo. And it is a very valid concern whether the lottery systems may very well not be around in 20 years.
The people who are most hurt by this are the ones who got settlements for accidents and who might need long term care. Those people are the ones getting screwed most. (Knowing one guy who should never have gotten a settlement to start with – nothing like getting a settlement for riding a motorcycle drunk and stoned off his ass, doing more than 120 mph, winding up with a broken neck and getting $1.3 mil out of it, is dumber than a stone, already scheming how to get it all and blow it. No, I don’t feel sorry for him and his own stupidity, but there are those who have such settlements who I do feel for.) Should I be injured by someone where I couldn’t work any longer, I would be more concerned about eating for the rest of my life vs. buying a giant flat screen TV, a McMansion and a few hummers (the driving kind
).
I’m curious if anyone knows how much JG Wentworth (or Peachtree or the others which are popping up) takes in fees to buy the annuities and screw most people? Anyone know?
I was surprised to find a web site that compiles complaints about JG Wentworth’s business practices. According to that site, JG Wentworth has taken up to 70% of the original value of the settlements.
http://jgw.bravehost.com/index.htm
Another thing that I didn’t know before is that there are significant legal costs associated with cashing out a settlement. An annuity is an agreement with a bank that can be broken for a fee paid to the bank, but a settlement must be negotiated in court by high-priced lawyers. That bit, apparently, comes out of your own cut when you deal with JG Wentworth.
Structured Settlement Blog: http://is.gd/oTA
Still not worth it, in my opinion. I’m surprised that people go for this, but from what I’ve read, they’re preying on the elderly who don’t know any better.
Thanks for the 411! I have a blog entry forming in my mind and this will help.
It’s now very easy to determine whether or not an offer from JG Wentworth, Peachtree or anyone else is fair. You must calculate the effective discount rate (not just the discount rate), which includes the fees and costs.
Structured Settlements 4Real (URL http://structuredsettlements.typepad.com)
has a useful free calculator as does the Settlement Quotes Factoring Exchange. The output from this calculator will tell you how much the deal is effectively costing you for financing that should only be a last resort.
You should be careful when blogging – people sometimes read what you write and assume you know what you’re talking about.
Jim is right. There are legitimate reasons for entering a factoring transaction. For example, would you rather carry thousands of $ in credit card debt at an interest rate close to 30% or obtain a lump sum from your annuity at a discount rate of 14% to eliminate that debt? Sure, it’s not always so cut and dry, but there are numerous instances where the factoring of an annuity can save you significant money in the long run.
Michael, structured settlement payments are considered “damages” so they are tax-free to claimants. When a claimant “sells” his/her payments, the lump sum is also tax-free, as long as the transaction is approved in court.
MsJoanne, annuities are issued by life insurance companies, not lottery systems. So, a lottery winner need not be concerned about the lottery system being around in 20 years. And, even in this economy, life insurance companies are, by and large, fairly secure… even AIG Life.
Dave, thanks for the information! You seem very knowledgeable on this subject. I never claimed to be a structured settlement expert, just that I was annoyed with commercials that would take advantage of idiots with structured settlements. Mind you, the MBA on my wall is just for show.
I still can’t see a valid reason to take an annuity. With the prime interest rate at 7% right now, and settlement companies taking up to ten times that amount as their cut, the math just doesn’t add up. Even if the prime rate were to skyrocket tomorrow, it still wouldn’t equal 30% (honestly, who carries debt at 30%, besides people with gambling problems and poor relationships with loan sharks?).
And I have read about many cases of taxes being applied to the payouts. Although a tax-free option would be worth looking into if you needed to cash out an annuity, I suspect that getting the court’s approval would involve further legal fees (anytime you go through the court system, you will pay). The system works, people, but not for free!
I would be interested in hearing stories from people who had a good experience with structured settlements. I would guess that those would all be from people taking lump sum payments from huge lottery wins though. And who doesn’t need a problem like that?
I could not agree more that taking the annuity option is almost always a bad idea. People don’t realize that 400k in your hands is worth more than 1 mil in 20 years. My point was to say that if you already have the annuity, it may a good idea to get out of it (depending on your circumstances).
Note that there is a difference between a structured settlement (SS) and an investment annuity (aka savings annuity or lottery annuity). An SS is paid to one who wins/settles a lawsuit. The SS is owned by an insurance company, not the individual. The upside for the individual? no taxes. The downside? no rights of ownership (you can’t ask the insurance company to liquidate an asset that you don’t own). You can, however, sell your right to receive payments to a 3rd party firm (JG, Peachtree, etc). As long as you do so within the state and federal guidelines (ie. get court approval), you won’t be taxed on the payout.
Investment annuities are a different story. Since you own the asset in this case, you may have an out through the insurance company. A factoring company may even be able to offer you more money. But, there may be tax considerations here.
If you’re going to sell your payments, DO YOUR HOMEWORK. The big factoring companies are not the scumbags that people think they are. But, as with any financial transaction, you need to do your own due diligence.
It’s certainly not the cheapest form of financing available, but it’s not the worst. (you’d be surprised how many people are paying credit card rates in the mid to high 20s… if they can get financing at all). Again, if it were me, I’d fight like hell not to be stuck with the annuity in the first place (the real scumbags are the attorneys who force feed terrible SS’s to their clients in order to obtain a quick settlement).
This, as well as a myriad of other corporate crimes, is deregulation at work. We don’t have a chance in hell if we fall for TV hucksters. It’s very easy to steal our money and nearly impossible to get it back through the legal system.
This is a clarion call to do the homework before falling for the hype. People who aren’t offended by these obnoxious commercials and take the bait probably deserve what happens to them. They facilitate their own downfall by making that first call; computer users inadvertently clicking on sites that result in unwanted junk and bills in the mail don’t have a clue what happened.
Too bad the FCC doesn’t require good taste in television commercials. I HATE, HATE, HATE the J. G. Wentworth shriekers (and the miraculous resurrection of Billy Mays squawking about phone jacks). It might be time to turn off the TV for good and stop paying those exhorbitant cable bills.
I agree with others that your add “It’s my money…..” is both annoying and very demeaning to anyone with an IQ above 10. Do yourselves and the rest of humanity a big favor and can the crap!
This is by the most annoying commercial I’ve ever seen. I either change the channel or mute the tv every single time.
I fully agree with Ms Downing that those down-your-throat shriekers should be canned. And that gawd awful Billy Mays posthumously screaming at people to buy third rate products. That blowhard SHOULD rest in peace so that the rest of us can *lol* Tell me…who in their right mind would ever buy a product from someone (or some company) screaming at you to buy their product? I sure the hell wouldn’t. Not for a NY minute. What idiotic marketing department came up with the idea that bullying consumers would entice them into buying their product? Bad scripting or antics falls flat and is inexcusible. Greedy morons must be in their element to hawk products in such a (wrenching) manner. That’s about as tactful, if not embarrassing as that tv commercial for extends. *lol*
PS-when is technology going to come up with a tv that has an auto-mute option for tv commercials? That advent is long overdue.
LEGAL STEALING One can go from having a net structered settlement that pays 1652.00 bi weekly net for of time span of 13 yrs, but if one opts to need cash now the same settlement if broken down is aproximatley 1200.00 PER MONTH based on about 170K based on the approximatly 30% of the amount of cash you get up front from a structered settlement that is worth over 600.000 dollars over 13 years getting 1652.00 bi-weekly,,”so ya 170.000 need cash now” would be a rip off of over 400.000 dollars!! and that 400.000 plus the 170.000 you would recieve by just sticking with bi weekly payments and leave the 170.000 cash now,,,NOW,,I can’t beleive the law allows this to happen to people.Is it not a crime to Loan Shark?? ,,what then would one call this unjust greed by J G Went-worthless, even in Catastrophic events ie:health home,,etc your better off to see a credit counsiling service and make arrangments with creditors.There maybe something that would be worth considering “Get Cash Now” but it would have to be somthing beyond my ability to consider to be dealing with a devil,even a crook/fraudster might leave you with more money then “Get Cash Now” The world is already bad enough with deception by desperation,,Run and Don’t Look Back,You may turn to Stone
OMG how funny, i thought i was the only one who HATED these commercials! i consider them noise pollution and ANNOYING AS F—. two other thoughts: if youre dumb enuff to not do yur homework and get suckered out of $ so be it – you made yur bed.. and two, this commercials exemplifies the instant gratification i want it now mentality in america!
i disagree with i have a good deal with them im gettin 30,000 and there gettin 20,000 i still have 25,000, thats 75k annuity total and with my investment in the next three years i will have 80,200 rather than 75,000 in 3 years…..so that 20k they r takin is okay because i still will get it back if it wasn’t for this deal i wouldnt have the opportunity to make the extra 5,200 or to even be able to by a house…..im purchasing a home from a bank at little cost…i currently pay rent every month of 700 dollars that 700 dollars is now going to be my mortgage payment rather than paying 25,200 the next three years on someone elses investment im purchasing my home and putting that towards it now that ill have a nice down payment and money for the home and its even better my family owns construction biz and i have free or very inexpensive repairs…..so in conclusion if u understand the math this is a better deal than just getting 75,000 in 2013, because my rent payments that go to someone elses house will now be goin in to my own so the money isnt goin anywhere but to me and my investments thanks to jg wentworth giving me an opportunity to get money early and make it all back plus more! Just remember it depends ur situation do the math figure the numbers whats better waiting or investing? thats at least for the smart ones that actually know what there doing with the money because i know im not dumb enough to piss it away and do be very smart about it make sure you do wat u say and always do your research
This is a very interesting comment. I’m not sure where to start.
1) Thank you for proving my initial point. On an annuity that should have paid you $75k over three years, you now have only $30k (or was it $25?). I’m not sure how all that works out after taxes. But sure, if you did the math and it works out better that way, then you might be a special case.
2) I’m all for people buying a home instead of renting. It’s a different financial climate now, but I bought my first home because I didn’t want to pay rent (my roommate was moving away). I’m not sure if a bank would approve a mortgage under these circumstances under the current housing situation though. Still, by all means, please give it a shot.
3) I’m not sure what kind of investment that you are involved in that will award you $80k over three years on $30k initial cost, but you can count me in! My math might be wrong, but that’s close to a 35% annual return on investment. Aside from loan sharking, I’m not sure if that’s even possible. I hope that the JGW people didn’t convince you of this.
4) And one final thing: it’s good to have carpenters in the family. Every family should have at least on carpenter, one auto mechanic, and one doctor. Our family has a carpenter, an auto mechanic and a computer geek (arguably better than a doctor).
I would be interested to see how this plays out, however. It would be great if this works out for you, and I wish you all the best.
Michael
I really, REALLY, detest this commercial. Every time that it was on I imagined some horrible accident happening to each of those idiots in mid-sentence of saying “It’s my money and I need it now.” Especially , if I remember correctly, the one shouting it from their car window, I imagined this, “It’s my money and I—-*Destroyed by on-coming Semi.*
Super sad… absolutely true. And the must make a killing because national advertising like that….every commercial….must be terribly expensive to run.
I can’t imagine what kind of sick mind could create one of the horrible adds that this band of crooks run on TV. I sincerly hope that they, and the simpletons who paid them to make this sickening garbage die very soon and go straight to hell. I have been told by many informed people that hell consists of being forced to sit and listen to this mindless crap; for eternity.
And may no one have mercy on their souls!
It was interesting to read some of the better informed analyses here. Since I’m neither an accountant nor a tax lawyer, I can only draw the most obvious conclusions. As Dave points out, for someone with thousands of dollars in credit card debt (not that unusual nowadays) it might very well make sense to convert a structured settlement into a lump sum payment. Over the course of the loan from the credit card issuer, the debtor might wind up paying two to three times the amount of the original debt. Would the total payout of any structured settlement cover this? Maybe or maybe not. To compare one with another requires considering (1) the principle involved, (2) the interest rate, and (3) the period of the loan (or the payout). These transactions don’t extend indefinitely, but have specific time limits built into them. The factor that most people leave out is the time course of the debt payment or the structured settlement. Companies like J.G. Wentworth and Peachtree can obviously structure their own investments so as to cover the lump sum payments they make and still turn a profit.
As for the Wentworth commercials – an entirely separate question – I find them clever and pleasant sounding compared to most t.v. ads. It depends on musical taste. I like opera. Most people don’t, so I would expect them to dislike the ads.
ajhil´s last blog: The Blinkered View Written 11-25-2007
I also hate the commercials, I mean really. I am sure that is what they really want. If you hear it enough maybe you will go for it. Dumb, but smart.
I think they are fundamentally obnoxious and annoying. What makes them even worse is that they do not apply to a very large percentage of Americans. They are long, have a very annoying jingle, and seem sleezy and for desperate people. I try to file them in the “who cares and change the channel department” but that jingle is so annoying. JG Wentworth, I hope you read this…Your commercials SUCK!
On another show I was watching, a lottery winner got in trouble and had to go to this buzzard to get cash. He stated that he sold his 10 million dollar annuity for 2 million. Now to be sure this guy was an idiot. I really do not see how you can get into that much debt in a couple of years. He said he invested in some bad ventures, but that’s absurd.
It’s even worse that a company could take 80% of your annuity and not be tied to crime. The only reason I can see why anyone would use these businesses is that they are stupid with money in the first place. I have done dumb stuff in my life, but I hope I’ll have more sense when I win the Powerball. (Positive thinking, or a pipe dream, either one works).
877 cash now!!!!!877 cash now!!!!!877 cash now!!!!!877 cash now!!!!!877 cash now!!!!!877 cash now!!!!!877 cash now!!!!!877 cash now!!!!!877 cash now!!!!!877 cash now!!!!!877 cash now!!!!!877 cash now!!!!!877 cash now!!!!!877 cash now!!!!!877 cash now!!!!!877 cash now!!!!!
I wouldn’t even consider any services from him because of his annoying commercials. How professional could he be if he stoops to that which annoys us so? Not a very good marketing strategy!