Secondary Market Annuities
Secondary market annuities offer fixed term payment streams from top quality insurance carriers. The high quality creditworthiness of the insurance carriers usually translates to lower returns to the investor, however secondary market annuities provide yields one to four percent higher than comparable assets.
The term secondary market annuity has become an industry standard referring to the rights to receive specific future payments that originate from an existing annuity and become available for purchase. These cash flows originate from factored structured settlement or an existing primary annuity contract that allows for it to be sold or assigned to someone else.
Secondary market annuities offer many of the primary market benefits, period certain, guaranteed yield, without all the restrictions associated with insurance contracts. Simply put, secondary market annuities offer higher returns and fewer restrictions, with relatively little additional risk.
Origin of the Secondary Market Annuity
The term secondary market annuity refers to structured settlement payments, period certain immediate annuities, and lottery payments. The payment stream is an existing, fixed receivable or derivative.
The majority of secondary market annuity transactions are from structured settlement payments for damages or personal injury. These payments are funded by annuities issued by top rated insurance carriers, like MetLife, New York Life, Prudential and others.
When the original owners of payment streams sell their future payments for cash today, a secondary market annuity derivative is created. Furthermore, it is simply an existing payment stream, transacting in the secondary market.
