What You Need To Know
Posted on May 28, 2014
There is a lot of buzz around Secondary Market Annuities. They are growing in popularity and more people are seeing the value in owning one and having financial security both during their lifetime and for their family after they depart this life.
Secondary Market Annuities are payment streams sold by the original annuitant in exchange for a lump sum payment to them right away. The vast majority of these annuities available were originally part of a structured settlement in a personal injury lawsuit. When the original annuitant sells their future payments for a lump sum, a “Secondary Market Annuity” is created simply because the existing, in force payments are transferred on a secondary market basis.
Secondary Market Annuities offer fixed-term payments from top quality insurance carriers and also come with yields that are typically higher than comparable assets. They offer all the benefits of a primary market, period-certain, guaranteed annuity, while offering higher returns with the same low risk.
Wholesale distributors acting as the principal buyer of Secondary Market Annuities commit their own capital exclusively to purchase each payment stream prior to marketing. They have a deeply vested interest in ensuring that the purchased payment streams are meticulously vetted before offering them for purchase.
When you purchase a Secondary Market Annuity a judge reviews the proposed contractual transfer of payments and only approves the sale if it is in the best interest of the seller (the existing annuitant) and in accordance with state structured settlement protection acts and section 5891 of the Internal Revenue Code. Once the judge determines that the sale is in the best interest of the seller, the judge issues a court order approving the contractual transfer. The court order itself does not transfer title to the payments.
The court has no duty to verify if the payments are in fact valid or if there are any claims to the payments. Actual payment verification is done outside of court. The transfer process ensures that the end purchaser’s right to receive payments is conveyed by a clear chain of contracts connecting the seller and the end purchaser. This is why it is extremely important to make sure that you buy your annuity through a reputable broker that will handle all the due diligence for you that is needed and ensure that this is in your best interest.
Your broker should have real experience in this field. Further, as in any financial services transaction, your broker should have errors and omissions insurance specifically for this type of transaction. Not many brokers have the track record to get or are eligible for E and O coverage for these specialized transactions. Secondary Market Annuities are a good source for higher yield, guaranteed payment streams. Be sure that you are protected and the payments are thoroughly reviewed before you finalize your purchase.
If you would like to discuss ways that I can help you in this process of purchasing a Secondary Market Annuity please contact my office to set up a time to chat.
John Bulbrook, Bulbrook Drislane – IN-FORCE ™ Secondary Market, Finance and Investments, Secondary Market, Annuities, Fixed Term Annuities, Life Insurance, Structured Settlements, Previously Owned Annuities, Pre Owned Annuities, Immediate Annuities, Factored Structured, Settlement Secondary Market Annuity, Aftermarket annuity, Inforce fixed term annuities, Inforce fixed term annuity, Inforce annuity, Deferred Variable Annuity, Inherited Annuity, Equity Annuities, Straight Life Annuity, Non Qualified Annuity, Mutual Fund Settlement, 20 Year Annuity, 10 Year Annuity, 5 Year Annuity – Click here for his Facebook,Twitter, LinkedIn, Google Plus