About Secondary Market Annuities
Secondary Market Annuities are guaranteed payment streams backed by annuities that individuals sell at a discount. Purchasers acquire the right to receive payments from these existing and in force annuities, and the payments occur over a specific period of time and offer a fixed rate of return.
This investment is generally considered to be a good vehicle for “safe money” savings.
Secondary Market Annuities originate as structured settlement claims. The insurance companies that offer these fixed and period certain payments are highly rated by Standard & Poor’s and other agencies for claims paying ability. This makes the Secondary Market Annuities we offer one of the highest yielding, and safest fixed income assets available today.
Yields on Secondary Market Annuities are higher simply because the seller of the payment stream is willing to sell at a discount for cash today.
Clients benefit from that discount and receive a higher yield on the cash flow compared to comparable annuity products available in the open markets.
What is a Secondary Market Annuity?
When we say ‘Secondary Market Annuity’ we refer to period certain, fixed term annuity payments that are assigned in a ‘secondary market’ transaction.
These annuity payment streams belong to individuals who seek to sell their future payments in exchange for cash today in a ‘factoring’ transaction. Typically, the payments are guaranteed and period certain payments awarded to individuals in structured settlements. The right to receive these annuity backed future payments is transferred in a court ordered and regulated process.
In addition to factored structured settlements, Secondary Market Annuities may also refer to in-force period certain annuities, or a lottery prize payout. In any situation, these pre-defined, fixed term income streams offer a higher yield because the future payments are sold at a discount.
The vast majority of Secondary Market Annuities we sell, and which we focus in this website, come from structured settlements, whereby the original payee/ recipient decides to sell their future payments for cash today. Through a court ordered assignment process, purchasers acquire the right to receive the existing payment stream from the current recipient of the income. This discounted sale transaction creates an opportunity for a profitable, safe investment in an in-force payment stream.
Who It’s Right For
We have buyers in all age groups, from young conservative investors to retirees seeking a defined income stream.
Secondary Market Annuities are perfect for investors seeking a higher yield than any other available fixed, period certain investment. This may mean an income stream, a future lump sum, or a combination.
These payment streams work equally well for retirement planning, college saving, inheritance planning…
They also work particularly well in situations where a couple may have a wide discrepancy in age. These situations make lifetime income products like index annuities uneconomical.
Who Should Not Consider a Secondary Market Annuity
Investors who may anticipate needing liquidity from their investment should not consider a Secondary Market Annuity. While we can facilitate the re-sale of a payment stream, a Secondary Market Annuity should be considered il-liquid and can not be easily cashed in.
Also, investors specifically seeking a lifetime income stream should consider other annuity products that offer longevity protection.
That said, often it is more lucrative to buy a lump sum Secondary Market Annuity that gives profitable options in the future, than it is to buy lifetime income now in our pervasive low rate environment.
How To Buy a Secondary Market Annuity
To buy Secondary Market Annuities, it’s best if we have a conversation about the purchase process and to understand just what you are seeking.
Because this market moves quickly, often we can reserve a case for you before it becomes publicly available.
If you prefer to browse the site, be sure to bookmark our Secondary Annuity Inventory page and refer to it often. Cases are updated continuously throughout the day.
Once you have bought one, the process is easy and most of our clients buy from 3 to 10 cases depending on their needs, to build a diversified portfolio.
How Does The Secondary Market Annuity Work?
A Secondary Market Annuity is either a structured settlement or a lottery prize offering future payments. The payment streams originate when the recipient of a payment seeks to sell a future income stream or lump sum payout for cash today.
To make our clients the new payees of these in force, existing annuity payments, we follow a rigorous legally reviewed and legislated transfer process. This process transfers the right to contractual payments from the seller to the buyer. This presents a valuable benefit to consumers who are looking for safe investments with higher than average market yields.
The value of the secondary market annuity is clear: You earn above average interest rates and guaranteed payment streams from a stable insurance carrier.
The boost in return originates from the seller’s willingness to sell contractual payments at a discount so the effective yield is much higher than you’d find when paying face value for a similar contract in the primary market.
In addition, insurance companies that back these contracts are of higher than average credit quality which makes secondary market annuities a perfect option for safe money assets.
So Just What Are The Risks With A Secondary Market Annuity?
Like any investment there are associated risks as well. A thorough analysis of your financial situation should be completed with a competent advisor to determine the suitability of secondary market annuities prior to purchase. While relatively low risk overall, it’s important to consider these risks:
- Safety– As with any annuity, the security of your Secondary Market Annuity investment is subject to the solvency and claims paying ability of the issuing insurance company.
- Court– A secondary market annuity purchase is transferred in a court administered process. Sometimes transfers are denied in court, for reasons to do with the seller or the jurisdiction. While there is no financial cost to you when this occurs, there may be opportunity cost.. We minimize this risk by offering many “In Stock” quick close, approved cases.
- FDIC– As with other annuities, this is not a bank deposit and no additional FDIC protection for your investment is available.
- Interest Rate– The effective yield of the purchase will not change over the term of the contract.
- Liquidity– an Secondary Market Annuity is generally il liquid. While we can facilitate the re-sale, the market at the time of sale would determine the price you would receive. It’s best to consider this purchase as a ‘yield to maturity’ investment.
Many of these associated risks are no different than what you’d find in alternate investments and with proper planning can be easily accounted for. Here’s how we address them:
- Safety– Make certain that the issuing company meets your satisfaction in regards to financial strength. With and secondary market annuity, Annuity Straight Talk will adhere to the same standards for company credit quality that we’d use when evaluating any other annuity transaction.
- Legal Review – In every transaction, extensive legal review ensures each transfer is complete and is a clear transfer of the payments to you.
- FDIC– With the absence of federal insurance on annuity contracts, it is essential to understand the safety mechanisms put in place by issuing companies. Insurance companies carry greater levels of asset protection and stability than can be said of any other industry.
- Interest Rate– Planning for changes in interest rates when buying secondary market annuities can be done with the same approach as with other financial vehicles such as bonds or CDs. For starters, there is no doubt that the initially higher yield will in part insulate this strategy from rising rates. In addition, laddering methods can also be used to invest partially over time to secure better rates on future contracts that will help protect the aggregate investment from interest rate increases.
- Liquidity– In order to mitigate any concerns over the lack of liquidity available in SMA’s be sure to consider the amount and time horizon of this investment in regards to your overall financial portfolio and retirement planning strategy. Call us for advice when working to implement the os of a secondary market annuity within your portfolio.
Because this option is new to consumers, it’s important to understand the market fully before making a reservation.
However when you do reserve, know that these payment streams present an incredible opportunity for the right individuals. Available deals can go fast so when a desirable offer comes up, it is essential to act quickly in order to secure rights to the contract.
If you are interested in using a secondary market annuity to supplement your portfolio, use the links above to view our other pages and to educate yourself on the acquisition process so you understand what is expected of you when you decide to reserve a contract. SecondaryAnnuities.com has the largest selection of available inventory, so be sure to sign up to our list to get early notice of new deals.
Why Work With Us:
Nathaniel M. Pulsifer, the owner of this website, also operates a wholesale structured settlement trading firm distributing to institutions and through agents nationwide. This website is his retail outlet for Secondary Market Annuities where individuals can work with him directly and enjoy superior service, exclusive inventory, and best in class transaction management.