Buying an IN-FORCE™ Fixed Term Annuity…What Happens?

Posted on August 28, 2013

If you purchase an IN-FORCE™ Fixed Term Annuity you should expect to receive the following items at closing:

Closing Book which will contain the following documents:

  • Receivable Purchase Agreement
  • Sale and Assignment Agreement
  • Change of Beneficiary Designation
  • Duplicate Annuity Policy or Benefits Letter or Issuer Acknowledgement Letter
  • Certificate of Marital Status/Spousal Consent
  • Divorce Decree or Property Settlement Agreement, as applicable
  • Court Order permitting the assignment of the annuity payments and naming you as new Payee
  • Statement of Independent Professional Advice or Waiver, where applicable
  • Satisfactory Results of Uniform Commercial Code (UCC) (within 30 days of closing)
  • Judgment (within 90 days of closing)
  • Lien (within 90 days of closing)
  • Bankruptcy (within 30 days of closing)
  • Evidence of Lien Resolution , as applicable
  • Further assignments and trust documentation, if applicable
  • Disclosure Statement
  • Authorization Letter
  • Existing Annuitant’s Identification

As I’m sure you already know, IN-FORCE™ Fixed Term Annuities are not risk free.  As a Buyer, you must determine whether an IN-FORCE™ Fixed Term Annuity meets your risk tolerance and purchase objectives.

To help you a bit with that decision, I have included her a list of risks associated with an IN-FORCE™ Fixed Term Annuity:

  • The security of the IN-FORCE™ Fixed Term Annuity is directly related to the financial health of the insurance company that issued the annuity and its ability to pay claims as well as the terms of the court order that accompanies each transaction.
  • IN-FORCE™ Fixed Term Annuities are not deposits and are not insured by the FDIC or any other federal government agency.  They may be partially guaranteed by State Guaranty Associations but Bulbrook/Drislane makes no representations or warranties in this regard.
  • IN-FORCE™ Fixed Term Annuities are subject to interest rate risk.  Market interest rates may rise while the rate of return on the IN-FORCE™ Fixed Term Annuity is locked in. Fixed income purchases with longer terms to maturity are usually more sensitive to changes in interest rates.  One method of hedging interest rate risk during a volatile rate period is to build an annuity ladder by buying a series of IN-FORCE™ Fixed Term Annuities over an extended period of time, thereby averaging the rates of return.
  • IN-FORCE™ Fixed Term Annuities are monetized in U.S. Dollars. Foreign Buyers may be subject to currency exchange risk.
  • IN-FORCE™ Fixed Term Annuities typically must be held to term and therefore are not liquid purchases.

I hope this helps to clear up the risks involved as well as what you would expect were you to purchase one.  If you have any questions or are ready to talk about the purchase of an IN-FORCE™ Fixed Term Annuity, please contact us today!

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