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Annuities are financial products that pay out a fixed stream of income to individuals, usually retirees. The money comes from a substantial lump sum or monthly payments put into the annuity during the accumulation phase. Once payments commence at a specified date, the contract enters the annuitization phase.
Secondary market annuities originate from existing annuities that become available for purchase. They offer fixed-term payment streams, up to several decades long, from top-quality insurance carriers.
SMAs could be the right fit for your client’s profile if he or she is looking for above-average returns with relatively low risk. Investors must also have enough resources to tie up funds in this illiquid investment.
SMAs offer many of the same benefits as primary market annuities—including payment certainty and a guaranteed yield—without all the restrictions associated with insurance contracts. While insurance products often translate to low returns for the investor, SMAs routinely provide yields 1-4% higher than comparable original issue annuities at a lower cost and without introducing a high level of risk.
SMAs originate from individuals who purchase annuities as an investment or to help diversify their portfolio. Annuities may also contain lottery winnings or legal settlement payments for damages or personal injury. The income is structured to be paid to the annuity holder in fixed amounts over a long period of time. These payments are funded by top-rated insurance carriers, such as MetLife, New York Life, Prudential, and others.
When the original owners discover they can’t or don’t want to receive the money over time, they can sell their future payments for cash today, totaling less than the face value of their contract. This facilitates the sale and transfer of the annuity, which is what makes SMAs such a good deal compared to other investment products with similar risk.
In simplified terms, the buyer takes over the right to receive future payments from the annuity, a process that usually takes about 10 to 45 days. Behind the scenes, attorneys must perform an extensive legal review and work with the court to approve the transaction. The issuing insurance company must also agree to it, and if the money comes from lottery winnings, the state lottery commission is involved as well.
SMA Hub is far from merely a “middleman” in the process of transferring structured settlement cash flows. We acquire original issue annuities in their entirety using an independent business trust. Then, our experienced, on-staff attorney navigates the complexities of transitioning the financial product into a secondary market annuity.Read More +
With each secondary market annuity payment stream, Hub Business Trust is the principal buyer and puts its own capital on the line.
We have exclusive, quick-close, IN STOCK Secondary Market Assets inventory available for immediate transfer.
Our proprietary purchasing model allows purchasers to customize our in-stock Secondary Market Assets income streams by apportioning the cash flow to their needs.
With each secondary market assets, we utilize a professional payment servicing provider.