When insurance companies sell you an annuity, interest rates play a key role in determining your guaranteed rate of return. In an economy where interest rates are near historic lows and the stock market is near historic highs, investors face a conundrum. Risky stocks and mutual funds can generate better returns, but do you want to take a chance of losing a big chunk of your safe money if the stock market crashes? Low-paying CDs are safe, but probably will not provide you with the income you need in retirement. If you are looking for a safe place to invest your money that can pay better-than-average returns, you should ask about buying a secondary market annuity.
Secondary Market Annuities
Annuities that are already owned by a person who decides to turn that stream of payments into an immediate lump sum payment are sold in the secondary annuity market. The owner of an annuity sells some or all of the contractually obligated stream of future payments, at a discount, to a willing buyer. The terms of the original annuity do not change – the new owner receives the same payments as the original owner. As the buyer, your yield can be several percentage points higher than if you invested in a new annuity with similar terms. Your higher yield is a result of the seller offering the annuity at a discount.
What to Expect When You Buy a Secondary Annuity
- Higher yield than annuities bought in the primary market
- Payments guaranteed by financially strong insurance companies
- Transaction through a legal process
- Both the judge and the insurance company must agree to make payments to you
- Purchase can take several weeks to several months to complete
Using an Expert to Facilitate Your Purchase
Buying a pre-existing annuity is a more complicated process than buying one directly from an insurance company. Any transaction must be approved by a court. You need to understand what you are buying. What happens if the original owner, upon which the terms of the annuity was based, dies? Do your payments stop? Can you use lifetime income riders to guarantee that you will not run out of money while you are alive?
All these are good questions. We know annuities and we know what to look out for when buying one on the secondary market. To get started, please click on the orange button for your free quote. We are here to answer all your questions, educate you, and help you make an informed decision about generating above-average returns through an annuity you can purchase on the secondary market.