Acquiring a Pre-Owned Immediate Annuity

More and more individuals are looking towards financial vehicles that are safe and provide a rate of return that will actually grow their money. A pre-owned market immediate annuity is most often the investment of choice.

Countless people own an annuity as part of their investment or retirement portfolio, with some of the maturity periods being as long as 50 years. These annuities provide monthly income streams that remain fixed over the course of the repayment period. However, some annuitants find that they do not or cannot wait to receive these structured payments. This desire for a lump-sum cash payment now creates a secondary market immediate annuity.

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Annuitants who want or need cash right away are able to sell their right to receive these structured payments to another party. This transaction is straightforward, as an experienced intermediary will facilitate the purchase and resale of these rights for a fee. All parties involved in the transaction (the original annuitant, the intermediary and the purchaser of the rights) will benefit from the transaction.

A pre-owned, in-force, or secondary market immediate annuity is popular because of the fact that they are purchased at a substantial discount. The original annuitant is willing to accept less than the full value of the annuity in exchange for a lump-sum cash payment. In order to determine the payment amount, the intermediary will consider the interest rate, the payment schedule, the amount of payments remaining, as well as the other terms of the annuity.

Using these key details, the intermediary will be able to calculate the present value of the future payments of the annuity. Once this value is determined, a purchase offer will be presented to the original annuitant, where they will receive the lump-sum cash that they are seeking. The intermediary will then resell the secondary market immediate annuity to a new owner, who in turn is able to acquire an asset that provides a higher rate of return, when compared to other like-risk financial vehicles.

Insurance companies that maintain an excellent credit rating with the major rating agencies – Standard & Poor’s, Moody’s and A.M. Best, create these annuities. While searching for a secondary market immediate annuity, a general rule of thumb is the longer the repayment period of the annuity, the higher the rate of return. For example, annuities that carry a 30-year or longer repayment period, may offer a rate of return of 6% or more. Additionally, you will find repayment periods as short as 2 to 3 years, or as long as 50 years.

You can review the listings below and contact us with any questions (866-866-1999). Examples of secondary market immediate annuities, as of December 16, 2011, include: Payee – Prudential, Duration – 30 years, 6.50%; Payee – MetLife, Duration – 50 years, 6.75%, and Payee – Continental Life, Duration – 30 years, 6.50%.

Due to the popularity of this financial vehicle, you will discover that there are only a few secondary market immediate annuities available each week. Additionally, these investments are sold as quickly as they became available, so time is of the essence. When you find a financial vehicle that interests you, you will be required to remit a 25% of the total amount due as a down payment. After the one or two week approval process has been completed, the remainder of the balance will then need to be paid.

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Just bought my first SMA and was very happy to have gone through Immediate I found them in an article in the Wall Street Journal. As a first time buyer, I had a lot of questions. But to their credit, they did a great job answering my questions directly or getting the right answers from the right people when they needed to.
Allen Boaman
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You may be asking yourself, “What are the disadvantages of this financial vehicle?” As with an investment, there are going to be tradeoffs. When you purchase a secondary market immediate annuity, you are purchasing an illiquid investment; you will not be able to cash it in quickly. You may be able to resell the payment rights in the future, but you will have to sell them at a discount. Additionally, you will be locked into the terms of the original annuity, which include the prevailing interest rate and the repayment schedule. In the event the interest rate rises on new annuities, then your annuity value will have decreased.

Another disadvantage of procuring this type of financial product is that various parties must approve the sale. In some instances, the original annuity is created to satisfy a legal dispute or is used to disburse lottery winnings. The court system and state lottery agencies will need to verify that all parties involved in the transaction are benefiting from the deal and that the sale of the rights is completed properly. You should always check with the intermediary to ensure that your purchase of the secondary market immediate annuity is completed accurately.

When comparing a secondary market immediate annuity to other like-risk financial vehicles, you will discover that it is a great investment choice that investors are continually seeking out. The low-risk, high rate of return of this financial product can provide you with the safety and rate of return you desire. Call today for a free no obligation quotation: 866-866-1999.

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