Secondary Market Annuities refer to a transaction where the present individual who owns an SMA, sells his future income stream to a third person for a large amount. They are made available at a discount price. Secondary Market Annuities offer a higher yield in comparison to fixed-term annuities.  The reason for considering an SMA pay-out is because the seller is in need of immediate dollars. They are safe when compared to other low-risk investments.

Why are SMAs safe?

Secondary Market Annuities were kept as a secret, which in the past until 2008, were bought by big financial institutions. On the other hand, it is an excellent strategy for those planning their retirement. Even for them who look for supplementing their income or transfer of wealth to their legal heir? They have the backing of Insurance companies with top ratings. Using diligence and correct judgment it is the safest of investments in annuity pay-outs. Also, it is wise to understand secondary market annuities with the right knowledge.

Secondary Market Annuities are a Good Fit for You

SMAs are an ideal investment for the following individuals who are as follows:   

  • Retiring individuals
  • College savings
  • Supplement income for working individuals
  • Transfer of wealth to legal heirs
  • Funding Trusts
  • Pension building for the future
  • Short term cash
  • Wealth replacement income: buy an income stream SMA with a lump sum SMA
  • Funding a structured settlement where SMAs help in better things to do
  • Short term cash management
  • Zero bond coupon investment alternative
  • Fixed-income investors
  • Investors who need liquidity before turning 59.5 years
  • Both Individual Retirement Annuity (IRA) and non-IRA investors

How to buy a Secondary Market  Annuities?

The process of buying a Secondary Market Annuities is simple as well as straightforward.  Reserve an SMA offer where it is displayed in the open for purchase. A buyer is given two days to return the documentation. The information is needed to confirm, make verifications and record the proofs submitted. In particular, US federal laws require a buyer to have a US address, a US tax identification number and a bank account in the US.     

Structured Market Annuities – The whole term is misleading is factored structured settlement. The pay-out is made by a highly rated Insurance firm. However, in recent times they have been several legal issues that have created doubts over SMAs. So, this has resulted in lawsuits where the investors have not received full payment as per the purchase agreement. Secondary Marketing Annuities need to be transferred to an approved custodial account, which is set up with provident Individual Retirement Annuity (IRA).  

An SMA purchase closes when a court reviews and vetoes its approval. A purchaser acquires the right to receive the payments through a court order.  Thereafter, a confirmation is received by the insurance firm that the assigned payment is to be made directly to the buyer of the Secondary Market Annuities.  The payments are guaranteed and paid as per contractual agreement norms. In the end, it is not what an individual is purchasing but what is being sold.