Note

Secondary Market Annuities are available to individuals through our Advisor Partners. Please contact us for a referral to an Advisor near you.

TERM OF INVESTMENT: FIXED TERM:

Pros– Known, Definite Yield and payments are absolute to you or heirs.

Cons– Payment stream has an end date.

Analysis:  Just like a when lender makes a loan, it is over when paid in full.  With a Secondary Market Annuity you are making an investment that is over when the principal and interest is paid back.

If you know you need to secure an income for retirement that you and your spouse can never outlive, you should consider a Lifetime Income Guarantee (AKA LIG) policy, with Secondary Market Annuities filling in the years prior to the LIG starts.

Alternatively, consider an Immediate Annuity or a Hybrid Annuity with a lifetime income rider.

LIG and Immediate Annuities are tied to your lifetime, and you can not outlive the income.  That payout, however, may be lower than a Secondary Market Annuity unless you live very long time.

FREQUENCY AND DURATION OF PAYMENTS: ABSOLUTE PAYMENT:

Pros: Payments accrue to the payee/ buyer you specify on your purchase reservation.  That may be you, your spouse as joint Tenants, your heirs, your Trust, or your estate.  What You See Is What You Get.

Cons: In some states, this may create probate issues.

Analysis: Create a Trust to be the receiving entity, to skip probate.  Plus, nearly all our payment streams use a servicing company to receive the payments, for ease of reassignment or change of payee.  Consult your own tax and estate planners regarding Trusts.

LIQUIDITY: GENERALLY SMA’S CAN NOT BE SURRENDERED OR CASHED IN

Pros: Defined benefit income planning is possible without sacrificing excess principal to acquire joint life income streams and lower payouts associated with other annuities.

Cons: If you need to liquidate a Secondary Market Annuity, it is possible but it may be  costly to re-market the payment stream.

Analysis: Devote only that portion of your assets that you can safely set aside in a fixed and long term investment.  While a payment stream can be re-sold or transferred, market rates at the time of sale would determine the value.

PROFITABILITY: SECONDARY MARKET ANNUITIES ARE MORE PROFITABLE THAN OTHER FIXED INVESTMENTS.

Pros: Attain a higher yield with your fixed income allocation, when compared to other comparable options such as bonds, CD’s or Fixed Annuities.

Cons: See Liquidity.

Analysis: Devote only that portion of your assets that you can safely set aside in a fixed and long term investment.

VOLATILITY: SMA’S HAVE NO VOLATILITY

Pros: Self evident.  Secondary Market Annuities are priced based on current market discount rates.  If rates fall, you have locked in an above market yield.

Cons: SMA’s are priced based on current market discount rates.  If rates rise, you may face a discount to face value if you are forced to sell, in addition to the legal costs and discount required to re-market a case.

Analysis: Consider a Secondary Market Annuity as a “Yield To Maturity” investment. Devote only that portion of your assets that you can safely set aside in a fixed and long term investment.  If you feel you may have a need to sell and can do so at a profit, it can be done easily with the servicing company.