Income For LifeHigh Yield Safe Investments: Secondary Market Annuities
Secondary Market Annuities originate when the owner of an existing annuity, structured settlement or lottery prize payout wishes to sell a future income stream or lump sum payout for cash today. 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.
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The value of secondary market annuities is clear: 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 Secondary Market Annuities?
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 Annuities investment is subject to the solvency and claims paying ability of the issuing insurance company.
- Court- Secondary market annuities purchasers are subject to court approval and for various reasons the sale to you may not be finalized.
- FDIC- Like 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- This purchase must be held to term so the investment is considered illiquid and cannot be offered for resale or reassignment.
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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 secondary market annuities, Annuity Straight Talk will adhere to the same standards for company credit quality that we’d use when evaluating any other annuity transaction.
- Court- Through our partnerships with companies that provide access to these products, expert legal analysis is employed. This allows our team to highly scrutinize each contract to eliminate all legal restrictions that might delay or terminate the purchase.
- 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 Secondary Market Annuities be sure to consider the amount and time horizon of this investment in regards to your overall financial portfolio and retirement planning strategy. Seek qualified advice when working to implement secondary market annuities within your portfolio.
Because this option is new to consumers, there is a lot you must understand before purchasing a secondary market annuity. This presents an incredible opportunity for the right individual. The acquisition process has a very specific set of guidelines that need to be followed. Also, the available deals can go fast so when a desirable offer comes available it is essential to act quickly in order to secure rights to the contract.
If you are interested in the prospect of using a secondary market annuity to supplement your portfolio, use the contents of this site to educate yourself on the acquisition process so you understand what is expected of you when you decide to reserve a contract.
The following section will help you to understand the process of acquisition of Secondary Market Annuities.
Click Here To Understand The Secondary Market Annuity Process
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High Yield Safe Investments: Secondary Market Annuities
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