Secondary market annuities, such as Assured Annuities, typically come from one of three sources. The first and most common source are annuities paid to an individual who settled a personal injury lawsuit or product liability claim. The second most common source are lottery payments that an individual won. The third source is investment annuities. For various reasons, a person who receives annuity payments may decide that they do not want or need them and so they sell their right to receive periodic payments in return for a discounted present value.
Why Do They Sell Them?
These payment rights are typically paid out over anywhere from 5 to 30 years. Many people who receive a structured settlement annuity or a lottery winning decide that the arrangement is right for them and never choose to sell. Sometimes, however, circumstances change and the fixed future payment schedule no longer is responsive to their needs.
In those cases, Assured Annuity can help by purchasing the individuals’ future payment rights in return for a discounted present lump sum.
Is It a Good Deal?
The people who sell their annuities oftentimes do so because, at some point, they need a lump sum of cash. They may be purchasing a house and want to save money on the mortgage by offering a very large down payment, they may be purchasing a new car or going back to school or paying off large medical bills. Others may simply want to cash out their annuity payment rights so as not to have to wait for their payments. In turn, these future payment rights are purchased by companies such as Assured Annuity and sold on the secondary market to interested buyers.
What about the Buyer
The buyer in the second market annuity gets a fixed term of payments on the same schedule that would have been paid to the original annuitant in return for a discounted purchase price, at discount rates that are often superior than those offered by the annuity issuer directly. These payment rights are generally paid by one or more U.S. based life insurance company with Standard and Poor’s ratings generally between A and AAA.
Buyers are generally attracted to these products because of the fixed terms and payment schedules, the excellent yields and the reliability of the companies that originally issued the annuities. The sellers are generally attracted to the arrangement because they can get access to present?value of all of their money at once and do not have to worry about planning for the future based around money that trickles in over a long period.
Secondary market annuities are sometimes referred to as in force annuities. These products have to be transferred from the original annuitant to the buyer by a court, which Assured Annuity handles for the Buyer.