Understand The Value In The Secondary Market Annuity

When we say ‘Secondary Market Annuity’ we simply refer to period certain, fixed term annuities that are available to you on the secondary market.

These are contracts and payment streams owned by individuals who wish to sell their future payments for cash today.  We connect buyers who want these future payments with the sellers, and manage the entire transaction in a highly regulated, court approved and attorney reviewed process.

Annuity Straight Talk, the owner of this website, is one of the nations largest retailers of Secondary Market Annuities.  Additionally, we also owners of the premier advisor’s wholesale Secondary Market Annuity resource, called DCF Exchange.  We operate at a high level in the industry with a wholesale distribution channel and a retail channel. We facilitate the transaction with a network of originators and partners around the US.

What Benefits Do I Get With A Secondary Market Annuity?

A Secondary Market Annuity offers security, safety, and an absolute guarantee.  They are perfect for investors who want a known outcome from their investment, payable to themselves or their heirs.

Secondary Market Annuities- sometimes abbreviated ‘SMA’- are also a good way to ensure an inheritance or income for someone else in the future- the payments are absolute and once purchased, will be paid no matter what.

A Secondary Market Annuity can produce a wide variety of payment streams to suit many planning situations.  Our Secondary Market Annuities inventory page is arranged in the following major categories:

Immediate Income

Deferred Income

Short and Long Term Lump Sum

As you would suspect by these categories, the duration and timing of income from each case varies.

When compared to CD’s and period certain annuities, the yields from a Secondary Market Annuity is 2-4% higher.  For example, period certain immediate annuities have an effective yield of 1.5 to 2%, whereas a Secondary Market Annuity is 4-6%.

Quite simply, you get more income for a lower cost.

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 cases where a couple has a wide discrepancy in age and lifetime income streams tied to the younger of the two are not attractive.

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 they can not outlive should consider Hybrid Annuities, Deferred income Annuities, or Immediate Annuities instead, to buy longevity protection.

That said, often it is more lucrative to buy a future lump sum Secondary Market Annuity to provide future flexibility for annuitization 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 Market Annuities 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 of the income they seek.

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. Annuity Straight Talk has the largest selection of available inventory, so be sure to sign up to our list to get early notice of new deals.