Information about Secondary Market Annuities- high yield, safe annuities

Executive Summary Of Secondary Market Annuities – New Video

Are you curious about Secondary Market Annuities, but want the high points in just a few minutes?

Well you are in luck- we’ve recently produced a new video summarizing Secondary Market Annuities.

These innovative fixed income contracts are an important part of our practice for investors seeking simplicity and definite yield.

Please leave a comment below with any questions about the video- enjoy!

To See Live SMA Inventory Click Here

CLICK HERE TO DOWNLOAD the Secondary Market Annuities Summary- the pertinent facts, on one page

Generating Returns With Secondary Market Annuities – Video 6

In a recent appearance with nationally syndicated online columnist Steve Savant, AST’s Bryan Anderson talked about why Secondary Market Annuities yields are so good.  What a refreshing alternative to CD’s and other options!


With interest rates low, consumers are seeking safe returns that beat certificate of deposits and traditional annuity rates. Some are finding increased returns in the secondary annuity market. This alternative insurance product could be an additional supplement to retirement income. Annuity Market expert Bryan Anderson is interviewed by Steve Savant, syndicated financial columnist and talk show host of Steve Savant’s Money, the Name of the Game.


Other videos in the series:

Video 1- Steve Savant and Bryan Anderson On Secondary Market Annuities

Video 2- Why Secondary Market Annuities Are A Great Income Alternative

Video 3- Using Deferred Income Secondary Market Annuities

Video 4- Lump Sums and Secondary Market Annuities

Video 5- Using Secondary Market Annuities In Planning Scenarios

Video 6- Steve Savant’s ‘The Name Of The Game” On Secondary Market Annuities


Using Secondary Market Annuities in Client Planning Scenarios- Video 5

In this final installment of the Steve Savant show “Lets Get Down To Business” our own Bryan Anderson discusses how we use Secondary Market Annuities in various planning scenarios.



Secondary market annuities are generally issued by highly rated life insurance companies. Factoring companies make a market for structured settlements with wholesale brokers and purchase these annuities for consumers seeking better returns. Annuity Straight Talk is a leading distributor for secondary market annuities. Product expert Bryan Anderson of is interviewed by Steve Savant, syndicated financial columnist and talk show host featuring Secondary Market Annuities on Let’s Get Down to Business.


Other videos in the series:

Video 1- Steve Savant and Bryan Anderson On Secondary Market Annuities

Video 2- Why Secondary Market Annuities Are A Great Income Alternative

Video 3- Using Deferred Income Secondary Market Annuities

Video 4- Lump Sums and Secondary Market Annuities

Video 5- Using Secondary Market Annuities In Planning Scenarios

Video 6- Steve Savant’s ‘The Name Of The Game” On Secondary Market Annuities


Lump Sums and Secondary Market Annuities- Video 4

In this fourth installment, Bryan Anderson and Steve Savant discuss mortality credits and the higher yield that Secondary Market Annuities offer to investors.  Feel free to give us a call if this video generates any questions,


Mortality credits applied to annuities can increase returns beyond a carrier’s portfolio yield. These credits are based on the annuitant’s age and the length of the policy. The practical application of structured settlements is based on matching an investor’s need to the available inventory of structured settlements. Product expert Bryan Anderson of is interviewed by Steve Savant, syndicated financial columnist and talk show host featuring Secondary Market Annuities on Let’s Get Down to Business.


Other videos in the series:

Video 1- Steve Savant and Bryan Anderson On Secondary Market Annuities

Video 2- Why Secondary Market Annuities Are A Great Income Alternative

Video 3- Using Deferred Income Secondary Market Annuities

Video 4- Lump sums and Secondary Market Annuities

Video 5- Using Secondary Market Annuities In Planning Scenarios

Video 6- Steve Savant’s ‘The Name Of The Game” On Secondary Market Annuities


Why Deferred Secondary Market Annuities Are The Most Efficient Use Of Funds- Video 3

In this third installment of the Steve Savant special week on Secondary Market Annuities, Bryan gets on a roll discussing how deferred income Secondary Market Annuities can offer the most powerful guaranteed income out there.  For customers who don’t need the bells and whistles of other types of annuities with riders and benefits, Secondary Market Annuities are the way to go.


Some structured settlements offer payments similar to deferred income annuities, where payments are delayed for a period of time before installments begin. But some structured settlements can defer for a period of time and distribute lump sums instead of a stream of income. Product expert Bryan Anderson of is interviewed by Steve Savant, syndicated financial columnist and talk show host featuring Secondary Market Annuities on Let’s Get Down to Business.


Other videos in the series:

Video 1- Steve Savant and Bryan Anderson On Secondary Market Annuities

Video 2- Why Secondary Market Annuities Are A Great Income Alternative

Video 3- Using Deferred Income Secondary Market Annuities

Video 4- Lump Sums and Secondary Market Annuities

Video 5- Using Secondary Market Annuities In Planning Scenarios

Video 6- Steve Savant’s ‘The Name Of The Game” On Secondary Market Annuities


Why Secondary Market Annuities Are A Great Income Alternative- Video 2

Here is video 2 of Annuity Straight Talk’s Bryan Anderson on Steve Savant’s nationally syndicated ‘Lets Get Down To Business” discussing Secondary Market Annuities.

This show is designed for advisors, so there are certain acronyms and industry shorthand is discussed.  If you have any  questions, don’t hesitate to give us a call to discover if Secondary Market Annuities might be right for your situation.


Structured settlements have two important characteristics that make them appealing to an investor: above market yields and/or discounted present value lump sum purchase. At the same time there are two possible drawbacks to structured settlements as well: il-liquidity and no lifetime payouts.

Product expert Bryan Anderson of is interviewed by Steve Savant, syndicated financial columnist and talk show host featuring Secondary Market Annuities on Let’s Get Down to Business.

Other videos in the series:

Video 1- Steve Savant and Bryan Anderson On Secondary Market Annuities

Video 2- Why Secondary Market Annuities Are A Great Income Alternative

Video 3- Using Deferred Income Secondary Market Annuities

Video 4- Lump Sums and Secondary Market Annuities

Video 5- Using Secondary Market Annuities In Planning Scenarios

Video 6- Steve Savant’s ‘The Name Of The Game” On Secondary Market Annuities


Secondary Market Annuities- AST on the Steve Savant show with Secondary Market Annuities

We hope you enjoy this first of several videos from the nationally syndicated online financial  commentator, Steve Savant, who recently hosted Bryan Anderson of Annuity Straight Talk on his show for a week of episodes featuring Secondary Market Annuities.  The show is geared to advisors and financial professionals but everyone will learn something.

Here’s the first video:


Product expert Bryan Anderson of is interviewed by Steve Savant, syndicated financial columnist and talk show host featuring Secondary Market Annuities on Let’s Get Down to Business.


Other videos in the series:

Video 1- Steve Savant and Bryan Anderson On Secondary Market Annuities

Video 2- Why Secondary Market Annuities Are A Great Income Alternative

Video 3- Using Deferred Income Secondary Market Annuities

Video 4- Lump Sums and Secondary Market Annuities

Video 5- Using Secondary Market Annuities In Planning Scenarios

Video 6- Steve Savant’s ‘The Name Of The Game” On Secondary Market Annuities


Case Study- Quick Close Secondary Market Annuities

We had a lovely experience over the weekend.  A client called Friday afternoon, late, wanting an in-stock SMA for his mother.  He’d been watching our list for a few weeks and made the mistake of reserving several cases from another vendor.

After 3 of his 6 cases from ‘the other guy’ fell apart, he called us back and reserved a 2 year short lump sum as a perfect CD replacement for her matured CD.

He was able to review the closing book over the weekend, and arranged her wire on Monday.  The case closed today, and the only delay was due to the slowness of the banks in processing the wire transfer.

If you are ready for the “In Stock” SMA experience, give us a call!

To check out our inventory available now- CLICK HERE

Fed Tapering- Unemployment And Deflation Is More Important Than Inflation Worries

Tapering“Tapering Is Not Tightening”

That is the news of the day.  What that means is that even though the Federal Reserve is tapering it bond buying and liquidity injection programs, rates are not tightening or rising.

This is a skillfully executed maneuver by the Fed.  What it means for fixed income investors is that with low rates here to stay, finding the highest yield and a low rate world is still your best option.  Secondary Market Annuities fit that bill perfectly.

High yield fixed income investments like Secondary Market Annuities provide a good rate of return on investment in today’s world, and if midterm lump sum cases are used, future liquidity events in the potentially different rate environment provide options that are not currently available in the market.  This is the tried and true laddering strategy, and it just makes sense.

Some recent news on the Fed produced excellent commentary. In Business Insider:

Currently, the Fed’s “forward guidance” consists of an unemployment rate threshold of 6.5% and an inflation rate threshold of 2.5% to help guide monetary policy. In other words, as long as unemployment stays high and prices remain low, the Fed will continue to do what it can to keep rates low.


And, Barrons summarized the day perfectly:

Is it tapering or tightening?

Federal Reserve Chairman Ben Bernanke insisted today’s decision to put the brakes on its $85 billion-a-month bond-buying program is not a sign of tightening monetary policy, adding that “highly accommodative fiscal policy remains appropriate.”

“This is not intended to be a tightening,” Bernanke told reporters during a press conference following today’s Federal Open Market Committee meeting.

Asset purchases will contiinue with ”measured” reductions at future meetings depending on economic dtata, Bernanke said.

The Fed remains committed to keeping short-term interest rates low. Bernanke says the federal fund rate isn’t expected to rise until 2015, Bernanke told reporters at today’s press conference.

However, the FOMC statement cautions that future actions are not on “a preset course.” Bernanke added that the central bank can ramp up quantative easing if needed.

The last sentence is critical.  The Federal Reserve indicates that it can ramp up more quantitative easing if needed whenever it wants to.  more monetary easing will equate to lower rates long into the future.

From ZeroHedge:

The Fed said that “it likely will be appropriate to maintain the current target range for the federal funds rate well past the time” that the jobless rate dips below the 6.5% threshold, “especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal.”

The Fed acknowledged concerns that inflation continues to run stubbornly below the central bank’s 2% target, saying that it is “monitoring inflation developments carefully for evidence that inflation will move back toward its objective over the medium term.” The Fed’s preferred inflation gauge, the price index for personal consumption expenditures, increased just 0.7% in October from a year prior, according to a Commerce Department data release earlier this month.


Buying Secondary Market Annuities- Understanding The Transfer Process

Buying Secondary Market Annuities In the Secondary Market Annuities world there are two methods of transfer currently in use in the industry.  One is used on a professional and institutional level, which we now utilize exclusively.  I’ll explain that in a moment. But first…

The Old Way Of Transferring Secondary Market Annuities

First, I wanted to explain a more inflexible method that we previously followed.  Following this “Old” method, cases are marketed on a ‘best efforts’ basis by many agents.  There’s a bit of a scramble around fresh inventory and cases may be marketed by multiple agencies.

If an investor is lucky enough to secure a case quickly and not have it taken out from under by another buyer, the investor’s name is directly entered into the court order and assignment documentation.  After court approval, this investor’s name is now a matter of public record, which is a level of exposure many people do not appreciate.

Because the brokers offering cases in this manner do not control the inventory – they are just ‘flipping’ it- they frequently are pressured by their sources to fund cases before all the documentation is complete.  Specifically, it became a common practice to fund the sellers of payments with investor money before the underlying insurance carrier issued an acknowledgement of the court order transferring those payments to the new investor.

Sometimes this acknowledgement letter takes 3 to 6 weeks to get issued, and when investor funds are used to buy a case before this is complete, there is exposure to the investor during this time period.  Now, in a properly reviewed case this risk is greatly mitigated with buyback agreements, review of the file, and review of the notices made to the carrier.  In short, it’s not really a risk as the acknowledgement is a foregone conclusion that simply takes a little time to complete, but still, it’s an uncomfortable time period.

Finally, once acknowledged and truly closed, a ‘direct to court order’ assignment to an investor becomes a rigidly inflexible arrangement.  Investors can transfer the payments to heirs via their will, or if they purchased in the name of a trust at the beginning, but that may involve probate (state dependent) and generally can not transfer to a subsequent buyer.  Hence, using this transfer process, these Secondary Market Annuities are il-liquid.

Summary Of The Old Way Of Transferring Secondary Market Annuities

This older method of transfer works, however the limitations are described above.  The limitations are:

  1. Public Disclosure
  2. Il Liquidity
  3. Potential heirs/ assigns complications
  4. Delays
  5. Lack of Control by Client And Agent
  6. Potential exposure of investor funds prior to complete acknowledgement

The New Way Of Transferring Secondary Market Annuities

The more professional and institutional method of transferring payments utilizes a Trust to be the named buyer in a Court order.  I’ll detail some of the benefits of a Trust in just a moment, but one of the key elements is that a payment servicing company receives the payments and makes them payable to the Trust if it is still the owner of the payment, or to whomever the Trust subsequently assigns its rights to.  Once a Trust re-assigns its rights to the payment, it has no ownership of those payments.

This is the process we now follow as it addresses each of the concerns outlined above.

  • Exclusive control over inventory, so our clients do not have the cases taken out from under them.
  • The trust is the named buyer, thus insulating the end investor from public disclosure
  • Our buyers can easily re-assign to both heirs or to other owners by working with the payment servicer, thus making the payments much more liquid.
  • Finally, by processing cases in a timely manner and extending capital to buy the cases, investor exposure to funding cases prior to the file being full and complete with carrier acknowledgement is eliminated.
  • As an added benefit, our supplier can also offer a guarantee of its work by going back to carriers to re-acknowledge the transfer after a period of time.  This is especially important, and is something brokers using the ‘old’ method can not do.

 Summary of The New Secondary Market Annuity Transfer Process

Utilizing these best in class transfer procedures, Secondary Market Annuities are now more liquid, more secure, and more flexible for our clients.  Please sign up to this site and download our Secondary Market Annuities buyers guide for more details, or give us a call with any questions.

Secondary Market Annuity Case Study 2- Immediate Income

We’ve had a lot of comments from readers of the SMA case study #1, so decided to write up another recent transaction to further illustrate how a secondary market annuity can be used to beat the low rates and generate retirement income.

“Mike”, who has been a member of the site for over a year, had plans to retire at the end of April, 2011 and was looking for the best income options for retirement.

While wanting to continue meaningful growth for future planning opportunities, he was also concerned about too much risk with his hard-earned nest egg.  We needed to find a way to enhance his level of retirement income so additional assets could be placed in reserve for a later date.

I knew how much money he had to invest so I kept an eye on the market and was able to grab the perfect investment for him.

What did Mike get?

We found a Secondary Market Income Annuity issued by New York Life with a purchase price of $309,000 that carried excellent benefits.  Here’s how it breaks down…

$309,000 initial investment.
6.25% guaranteed effective yield over 20 years.  Income starts immediately at…

  • $1600 monthly continuing for nine years, then…
  • $2150 monthly for eleven months with a lump sum of $100,000 in month twelve, then…
  • $2150 for seven years and nine months, then…
  • $2450 for two years and two months.

Aggregate income over the 20 year period will be more than $558,000!

Compare This Secondary Market Annuity Income Stream To An Immediate Annuity:

What is astounding is that investing his initial $309,000 in a period certain, 20 year immediate annuity today would have paid him only $1400 monthly based on his and his wife’s age.   This is an aggregate total of $336,000.

Buying the secondary market income annuity gave him more than $220,000 in additional income over the immediate annuity.  This is an unbeatable investment in today’s market!

Mike was able to purchase a significant income stream from a superior rated insurance company, and also receive a big lump sum payment in the middle of the term.  With this lump sum payment he has plenty of options for covering the income gap at the end of the term.

Again, this may not represent your situation but the enhanced rates in the secondary market lend a great deal of power to the idea of conservative asset management in retirement.

Wouldn’t you like to know what this market can do for you?

Contact us now to talk about a secondary market annuity strategy for your unique situation!

To Get Access to Secondary Market Annuities, Call 800.438.5121

Or, Please Click Here To View Current Secondary Market Annuity Availability

Secondary Market Annuities- Case Study

Be sure to read our SMA Case Study #2 also.

Case Study- 47 year old single male. When Dave came to me he clearly indicated he was extremely risk-averse.  Having been on the losing side of the S&L crisis in his early saving years and two major market corrections more recently, he was pretty fed up with the investment business.

Even so, he was able to accumulate a solid level of assets in cash and an IRA.  After taking time to understand his needs and current position, we began talking about annuities, as safety is what most appealed to him. Together we looked objectively at various annuity contracts he had been shown by other agents, including GLWB and deferred index annuities.

For one reason or another nothing was completely appropriate for him given his relatively young age and the fact that he really didn’t need to make any sudden moves.  We decided to wait for the right deal to come along.  Many investors and members of this site I speak with daily have the same cautious approach in this volatile market.

Along came secondary market annuities, and the potential for substantially higher interest rates on a guaranteed basis.  We began talking about the possibility before I had access to the products so he was well informed and able to act quickly.

Being prepared beforehand was extremely important to this process and enabled him to take action when the right deal came up.  I can’t stress enough, that pre-education a critical foundation for every individual considering these products.

Here’s what we were able to accomplish with several Secondary Market Annuities…

Over the course of two weeks, Dave purchased four separate secondary market annuities for a total investment of $294,910.  Rates on these contracts range from 6.25% to 7.25% over a time period of ten to 25 years.  To keep it simple I’ll use the aggregate figure and show distributions as a whole.

The individual payments listed represent the guaranteed payments as part or all of each specific deal.  As it all came together we were able to write it down on a timeline to see how it works in his unique situation. Here’s how it comes out based on his future ages at the time of each distribution.

1.) $60,000 at age 58
2.) $60,000 at age 60
3.) $30,000 at age 62
4.) $100,000 at age 63
5.) $265,000 at age 64
6.) $83,250 at age 67
7.) $100,000 at age 68
8.) $300,000 at age 73

Total Investment: $294,910.

Total Aggregate Cash Flow: $998,250

Blended Effective Yield: 6.874%.

This plan creates a staggered set of payments that will allow him to ladder various retirement income investments to counter longevity risk and inflation.
The best part is that he can do all this with no market volatility in any part of the equation.  These contractually guaranteed figures give Dave tremendous income potential in the future with the flexibility to adapt to changing market conditions throughout retirement.

With continued savings over the next ten years and conservative management I see no reason why he can’t start planning for an early retirement now.  Do you?

Now that’s my kind of plan!

It really shows what kind of output is possible with solid, consistent growth over time.  Now, to be honest, this clients name isn’t really Dave but he is so happy with the process and end result that he has made himself available to anyone of you that would like to talk to someone who has been on your side of the secondary market annuities process and chosen to take the leap.  Call or email me and I’ll share his real name and set up a time when you two can chat.

Click On for case study #2 to produce retirement income with a secondary market annuity.

Click Here To View Current Secondary Market Annuity Availability

New SMA Procedures Finally Unveiled!

DCF LogoFor weeks, I have hinted that we had some exciting developments in the Secondary Market Annuities industry.  Finally, here are some more details, and a completely updated Buyer’s guide too that outlines our totally revamped purchase process.

So what’s all this about?

Well, for years we’ve made SMAs a part of our financial planning.  The high yield and period certain income streams have a place in many portfolios.

But one of the main issues with the asset class is the time delay between case reservation and closing.  That, and the fallout….

Too many clients would reserve cases only to find them fall apart weeks or month later.  Lost opportunity cost and broken hearts made the market far less appealing.

Well, we’ve fixed that.

We are proud to finally announce our role as principals in DCF Exchange, the premier advisor’s resource for Secondary Market Annuities. 

After years in the industry, it became clear there is a need for a ground up re-write of the transfer procedure to produce this safer, smoother, and more reliable process.  So the new process is modeled off of industry leading institutions and securitization experts to bring you by far the safest and simplest purchase process in the industry.

The wholesale partner fills a critical role by putting capital on the line to smoothly acquire and process inventory.  We are now wholesale agents as well, and can work with top advisors so they can offer SMAs to their clients.  Naturally, at AST, we are one of those top advisors and are excited to offer our clients a whole new way of doing SMA business!

For advisors, the market is now much more accessible- learn about our advisor resources at DCF Exchange

For investors, here’s a top 5 list of how the new process is superior to all others

1)      A confidential Business Trust purchases each case, insulating buyers from public record documentation

2)      The wholesale entity uses its own capital to commit to each case BEFORE it goes on our inventory- EVERYTHING we have is exclusive, and the legal team is integrated from beginning to end!

3)      We use a best in class payment servicer that allows you to have liquidity! That’s right- we can now facilitate the resale of your SMA payments!

4)      We can fill custom orders with ease and speed

5)      Best of all, we now have IN STOCK inventory that can close in as little as 24 hours!

Please, download the new Buyers Guide to learn about or unique purchase procedures.  Check out the new Inventory List online. And above all, give us a call to discover how good an In Stock SMA can be!


Sign Up To Get The New Buyers Guide !

Click To See The New Inventory!


Thanks for your patience while we put this all together!

Why SMA’s Are Hard To Beat

While we work with a variety of annuities, we frequently gravitate to Secondary Market Annuities.  For investors specifically seeking a lifetime income stream that can not be outlived, SMA’s are not appropriate.  But for many, a fixed period of time or a fixed lump sum is appropriate, and the yield on the SMA’s makes it very attractive to use these fixed term cases.

For period certain returns, SMAs are beating everything handily with nothing else coming close for the following reasons:

  • The returns are well above any other fixed income asset class of similar safety and credit quality (A to AAA)
  • The income on the SMAs is consistent, known and a blend of principal and interest, facilitating a known and orderly drawdown of assets without risk to principal from price fluctuations
  • By using SMAs you’ll be able to count on this portion of your portfolio to provide steady, consistent cash flows to supplement your monthly living expenses and thus allowing you to leave other investments alone, allowing them to return to the “Average Returns” and eliminate a “Sequence of Returns” risk.  See this excellent summary of the sequence of returns risk, a study by Moshe Milevsky
  • Diversification will be achieved by purchasing several different SMAs that add up to desired investment and will provide the desired income

To put a solid floor of income in place, determine your needs and goals.  Contact us and let us know what you are looking for.  Understand the process so that when we find the right deals for you, you can make an informed decision

It takes some patience but in the end it’s well worth it.

Why Take 1.15% When You Can Get 4.5%?

NYLLogoNew York Life  announced earlier this year it’s short and mid term, guaranteed fixed annuity rate of 1.15%.  Citing a continued flat-line market, NYLife is offering rates little better than a CD as a guaranteed floor rate.

There is a market value adjustment, so the actual yield to maturity may be higher, however the floor may also be all that is earned

When considering fixed annuities or options similar to the NY Life above, take a moment first to call us and discuss Secondary Market Annuities.

Short and mid term lump sums routinely pay 4.5 to 5% effective rate of return.  Deferred…. compounding… and often, from NY Life itself!

To put it in perspective, a $100,000 investment today will pay back $102,311.89 in three years at 1.15%

The EXACT SAME INVESTMENT of $100,000 today will pay $109,197.02 at 4.5%

That’s nearly a 4X increase in real dollars – $2311 in Interest income vs $9197!!

Secondary Market Annuities are pure and simple, more income at a lower cost.  Give us a call to find out more.




No Easy Money in Muni Bonds

Jason Zweig is usually a surly and negative financial commentator.   I can’t recall the last time one of his columns said much positive about any financial marketplace.  This week is no exception as he takes aim at Muni  bonds, which many of our clients considering Secondary Market Annuities also hold.

I guess his position makes sense for someone  going IN to Munis in this marketplace… yields are so low that you must plan on holding to maturity (at 1-2%…), as any uptick in rates will result in a loss of principal.

But for those holding good munis with an attractive yield not threatened by maturity or a call provision, just hold tight.

This may sound  funny coming from someone selling financial products that compete with Munis.  But the truth is, a good yield on a tax free asset is just worth keeping.  Without question.

But What About Secondary Market Annuities?

Now that said, some of our clients are invested in Munis that have good yields, but the bonds are coming due, or are callable.  For those situations, Secondary Market Annuities are a great  alternative or re position investment.

Take a Muni yielding 5% tax free- it might have been issued 5 or 10 years ago, and if you  hold such a gem, you bought it a long time ago.  Your friends though you were weird settling for such a super low return then…. but you look like a genius now as it’s that’s a GREAT  tax free yield.

But then say your bonds mature in 2013.  You know you have liquidation coming soon, and you have to replace the investment.  What can compete?

We have clients in this exact situation… and they are choosing Secondary Market Annuities with yields in the 5-6% range.

They are replacing the yield on their Muni portfolio, selling their bonds that have short maturities, and re positioning in the best way they can find now.

And I think it’s a great strategy.


Read Mr Zweig’s dour assessment of Munis here if you want.  As with most of his work, he’s negative and arrogant at the same time, but does make some good points.

Perfect IRA Deal- A Nice Deferred Lump Sum

Today I want to feature a deferred, lump sum investment that is just hard to beat.  We have two similar lump sums, from two different top rated carriers, AIG and Prudential.  Each have the same payment stream.

The AIG deal is this one:

What makes this so special?  Well, compare it to a CD or a fixed annuity.  For an investor with a bucket of cash and time to defer, there are few better ways to position assets today.

Take an IRA for example.  For a 50 year old, an IRA is a bucket of money that you can’t touch until you retire, age 59.5 at the earliest without IRS penalty.  What’s a 50 year old to do? You have to defer for 10 years at minimum…. and if you’re looking to retire at 65, this is a perfectly timed passive and safe investment.

Long term deferred lump sum investments make perfect sense in an IRA where you can’t do anything with the money anyway until you retire.  And concerns about a large amount of taxable income coming in one year are moot when you do this deal in an IRA.  It’s all tax deferred anyway.

Compare CD’s at a paltry 1.5 % rate, taxable annually… Fixed annuities at about 3%…. Muni bonds at 2% to 4% and susceptible to principal degradation if rates rise… and compare to Treasuries at 1%… ish.

These yields are you other ‘safe’ money options.  Why wouldn’t you seriously consider a fantastic  lump sum deferred deal like the one above that has a guaranteed price, and guaranteed payout, fixed and defined terms, and a great rate?

We’re waiting for your call- 2 of these are available today, one from AIG and one from Prudential.  800-438-5121.

Substantial Immediate Income & 5.5% Rate

Today I want to highlight two large immediate income deals.  It’s not often that we have substantial cases, because most settlements are smaller in nature.  However today we have a Genworth and a John Hancock case each nearly $2 million in size.  And each offers a long-term increasing income stream that is just perfect for retirement.

The most attractive case I have seen in years is this John Hancock case.  At a 5.5% effective interest rate, this is truly an outstanding deal.  With fixed annuities paying in the neighborhood of 3%, high quality bonds in the 3 to 4% range, and 20 year period certain immediate annuities in the 2 1/2% effective rate of return range, the 5.5% rate on the John Hancock case is an astounding value.

For an investment of just over $2 million, we can deliver a guaranteed 33 year income stream paying out $5,117,771.09.  Can your financial advisor guarantee you the same output?  I doubt it…

The beauty of secondary market annuities is that we can simply deliver more income, coupled with an outstanding guarantee, for a lower purchase price than other comparable investment options.    No other retirement income plan comes close to this level of return, guarantee, and safety

The downside of the John Hancock case is that it cannot be split among several investors, it cannot be purchased with IRA funds, nor can a trust be the purchasing entity.  But it is perfect for high net worth individual looking for a guaranteed income stream lasting 33 years, and we’re investigating the use of a simple LLC holding company to accommodate a couple of members to purchase the case.  Call for details

The case starts paying $4880 per month in January of next year, and that payment stream increases by 3% per year for five years.  Then in the middle of 2018, the income jumps from $5657 per month to $9478 per month.  That income stream also increases 3% per year, and lasts 27 years.  The final 12 months of payments are at $21,054 per month.

This is a substantial income from one of the top carriers in the business.  With uniform A to A+ ratings and a Comdex score of 93, John Hancock is simply at the top of the game.

As if the John Hancock case wasn’t enough, we also have a Genworth case nearly the same size that pays out over a shorter period of time. The Genworth case starts in just a few months with its income at $10,350 per month.  The income stream increases each year for 18 years, with a final 12 months at $17,620 per month.

Whereas the John Hancock case cannot be split, this Genworth case can be split among several investors, so if you are interested in a portion of this case, please let me know.

These two large immediate income cases show just some of the power of the secondary market for annuities.  If either one suits your fancy please don’t hesitate to call to learn more.

Is Your Home Equity Optimized?

Home equity has been unreliable  recent years.  Too many used home equity as an ATM, and the real estate downturn has left many realizing the folly of their ways with homes worth less than their mortgage.

However while  most of the visitors to this site have significant equity or paid off homes, most are only considering their homes as an asset to be utilized far in the future when they downsize.

I’d like to propose another way of using your home today, and capitalizing on the unbelievably low interest rates in the home mortgage market.

For many people with good credit, home loans can be obtained in the 3% to 4.5% range.  It doesn’t really take a rocket scientist to realize that investing money borrowed at 3.5% into a new investment yielding 5 to 6% is a good deal.

Consider these four current offers (as of 8/2/12): each one offers a solid cash flow, as well as lump sums.  Depending on how much money you borrow from your home, the income stream can be used to pay your mortgage, even pay it off.  This leaves you a lump sum that matures in the future as essentially free money.

Home Equity Secondary Market Annuities

The Genworth case is a perfect example.  It pays $4800/ month for 306 months, then pays $550,000 lump sum.  At 4% interest, you could borrow $1,005,413 on a 30 year home mortgage with payments of $4800/ month.   Theoretically, you could borrow the entire purchase price of $922,969, pay the mortgage off with the income stream, and be left with $550,000 at the end of the term.

Now, jumbo mortgage rates, your risk tolerance, and other factors may make this specific amount of borrowing not advisable.  But let’s say you have $550,000 to invest, and a paid off home worth $1M.  You could easily borrow $400,000, and rates on 15 year mortgages are as low as 3.5%.  The payment on this is 15 year mortgage is just $2860 per month.

Then, combine your mortgage proceeds and your available cash to purchase the $922,969 Genworth case yielding 5.5% over 28 years.  Utilize $2800 of the monthly income from Genworth for your mortgage payment, you are still left with $2000 month of income for the first 15 years.  Your house is paid off after 15 years, and your income from Genworth jumps to $4800 a month for another 10.5 years.  As a super bonus, you also have a $550,000 lump sum windfall- your entire invested principal is returned in full, and meanwhile your enjoyed 15 years of $2000/ mo and 10.5 years of $4800/mo.  That is a superb investment.

Utilizing home-equity in this way is very safe, as your mortgage payment is directly offset by your new income source, and the investment that you make yields a higher rate of return than your debt costs you.  There are home mortgage interest tax deductions to take into consideration as well that may make this even better.  For retirement investors looking to safely utilize home-equity, a strategy like the one described above is hard to beat.

It just so happens that we currently have four similar cases to the Genworth case that all would suit this strategy.  Each includes significant income streams and a lump sums.  For investors with home-equity, you owe it to yourself to make lemonade out of this lemon of a low rate environment.

Don’t let these low rates go to waste.  Grab some cheap mortgage money, and give us a call to secure one of these fantastic income with lump sum Secondary Market Annuities. In most cases, we can make arrangements to hold cases while your refinance is processing.

Excellent Deferred SMA’s

Summer  is heating up, and the deferred Secondary Market Annuities we have available this week are hot too.  For so many, just a few short years of SAFE, deferred growth can make a huge difference in planning stable income streams.  Locking in a future income stream now with a strong carrier can be a great move.

Below are selected deferred income contracts we have available.  Click the image to  see the whole list.

As you may  know, these move quickly so if there’s a deal you like, don’t hesitate to give us a call to reserve it.  They might not be available for long

Deferred Secondary Market Annuities

Also, these income + Lump Sum contracts have some attractive features.  The Prudential case #06460 is a solid long term income stream, with a decent lump sum not far out.

Deferred Income Secondary Market Annuities

If you have any questions about our Secondary Market Annuities do not hesitate to call or email.

Most of the questions we receive regularly are also addressed here: SMA FAQ

How Life Contingent Secondary Market Annuities Work

After several conversations this week with prospective buyers about life contingent secondary market annuities, I felt it was important to broadcast some information about these exciting high-yield opportunities to everyone.  The two deals that I am highlighting today are new on our list.   They might be gone soon, so if they look good, let’s chat soon! I will  quickly highlight a life contingent deal, and then explain how life contingent deals work.

The first deal is a large Prudential deal.  This deal will absolutely drench you in income for 30 years.  The final years worth of monthly payments is an astounding $17,875.56 per month- this contract pays out a total over $4 million over 30 years, on an investment of just $1.4 million today.  This astounding 6% yield simply cannot be matched anywhere.  The seller in this case is younger- in his 20s- and life insurance is already approved. 

Life Contingent Secondary Market Annuities

Life Contingent Secondary Market Annuities as of 6/27/12

The full payment stream is as follows:

4 life contingent monthly payments of $1,860.25 beginning on 09-01-2012 through and including 12-01-2012; 360 life contingent monthly payments of $1,916.06 beginning on 01-01-2013 with a 3% annual increase through and including 12-01-2042;

264 life contingent monthly payments of $7,181.79 beginning on 01-01-2021 with a 3% annual increase through and including 12-01-2042;

Plus Lump Sums:

01/01/26 = $100,000

01/01/31 = $200,000

 This is just an incredible, long-term, increasing income stream.

So how does a life contingent payment stream work?

 I am going to start out by saying that life contingent deals are not for everyone. If you don’t understand the Secondary Market for annuities, or feel unsure about handling investments, they might not be for you. They add a little bit more complexity to the secondary market annuity transaction, and honestly sometimes they do not close.  Where about one in 10 SMA transactions fail to get approved in court, we have an even lower success rate with life contingent deals.

 So with that disclaimer out of the way why am I telling you about these deals?  Because they come with a higher yield. 

 A life contingent secondary market annuity simply means that the payments due to the seller – and thereby due to you as a new buyer – depend on the seller’s life.  If the seller dies after you buy the payments, the payments will cease to be made by the insurance company. 

 Therefore, in order to make this an attractive and safe investment for you, life insurance is purchased on the life of the seller that will pay you any amount due to you under the remaining terms of your contract.

 Let’s use an example of a current deal on our list that is new today.

Life Contingent Secondary Market Annuities

Life Contingent Secondary Market Annuities

Looking at the CIGNA deal, the payments start in December of 2019.  On this deal, the first 36 payments are guaranteed.  The remaining 126 payments are contingent on the seller’s life.  In this case, the seller is a 40-year-old male. 

 The benefits statement is:

36 guaranteed monthly payments of $1,590 beginning on 12-11-2019 through and including 11-11-2022;

116 life contingent monthly payments of $1,590 beginning on 12-11-2022 through and including 07-11-2032.

 On 12-11-2022, the date of the 37th payment, your accrued principal and interest balance is $140,674.  Life insurance in excess of this amount has already been purchased by the seller, with you as the buyer of these payments to be named as a beneficiary under a collateral assignment. 

 If the seller is to pass away at any time during the life of this 14 year contract, the amount due to you under the amortization schedule of this deal will be paid to you.  If there are more life insurance proceeds than what remains owed to you, the remainder amount pays to the heirs of the seller.

Pros and cons of Life Contingent Secondary Market Annuities

Because life contingent deals are not absolute payment streams, they’re not for everyone.  Some investors do not want the uncertainty of receiving a lump sum in the future. 

However the flipside is also a possibility – receiving a lump sum might be an unexpected windfall.  It might allow you to reinvest in a different rate environment, or it may be flexibility that is a pleasant surprise.  There can be some complications purchasing life contingent deals with IRA money, so be sure to give us a call.

The important thing to look at right now is that life contingent deals have a higher rate of interest.  This reflects the added complexity, and sellers are willing to accept a higher discount rate to sell life contingent payments.

If you are seeking a higher yield, then a life contingent deal might be for you.  We do not publish all the life contingent deals available to us, so be sure to give us a call.  We can discuss your needs, and find the right deal for you.