What Is a Secondary Market Annuity (SMA)?

A secondary market annuity is when the present owner of an 澳洲幸运5官方开奖结果体彩网:income annuity trades their future 𒀰income payments in🃏 favor of a lump-sum payment.

Annuities are designed to offer a steady stream of income for the owner, either immediately (as with an 澳洲幸运5官方开奖结果体彩网:immediate annuity) or at some point in the future (as with a 澳洲幸运5官方开奖结果体彩网:deferred annuity). A secondary market annuity, in contrast, allows an investor to take a one-time 𝐆payment instead of a stream of payments over many years.

Understanding Secondary Market Annuities (SMAs)

Secondary market annuities began in the 1980s 🎃and have since become a profitable business, catering to those who wish to receive a l🐬ump sum of cash and those who wish for high-yield investments with little to no risk.

Purchasing an annuity involves the investor paying for it via a series of payments, such as monthly, or a lump sum ꩵpayment. In turn, the financial provider, which might be an insurance company, agrees to pay back the owner a steady stream of payments.

If you have an annuity, you typically collect annual or monthly payments, usually for the rest of your life. Exampl𒉰es of annuity income st✃reams include the following:

• Insurance money
• Lottery payoffs
• Lawsuit settlements
• Money left to someone as part of a will

Annuities often attract those who are 澳洲幸运5官方开奖结果体彩网:planning for retirement, as they offer a guaranteed income for a period of life without steady salaries or wages.

Depending on your situation, receiving annuity payme൲nts over several years might not be ideal, and you may be better off selling the annuity for a fixed price to a buyer interested in the annuity.

However, 澳洲幸运5官方开奖结果体彩网:liquidity is a f💙actor. Buyers of secondary market annuities should be financially stable enough to be able to invest a large amount of money without the option of pulling it out.

Secondary Market Annuity Process

Secondary market annuities are often bought from the original owner with some type of involvement from intermediaries and courts. SMA🎀s are usually underwritten by credit-rated insurance companies, which are the common issuers of the underlying annuities.

A secondary market annuity buyer can expect to receive annual payments and an 澳洲幸运5官方开奖结果体彩网:interest rate, depending on the terms of the annuity. Compared𝓡 to similar annuity products, yields on secondary market annuities are t꧒ypically higher because SMAs are sold at a discount to realize a lump-sum payment in advance.

The typical terms for secondary market annuities range from five to 20 years, but they can be as short as one year or as long as 35.

Once the transfer is made, the buyer of the secondary market annuity will receive payment🧜s from the original annuity insurance company or another entity. The annuity is still paid in the same way, but the recipient is different.

The Bottom Line

A secondary market annuity is a transaction where the owner of an annuity trades future income payments for a lump-sum payment. This is in contrast to many annuities, which feature a steady stream of income payments over many years, often for the rest of the owner's lifetime.