What are Secondary Market Annuities?
Secondary market annuities are financial products that involve the purchase of an existing annuity from another individual rather than buying a new one directly from an insurance company. These annuities are often sold by individuals who need immediate cash and are willing to sell their future payment streams at a discount.
These annuities can originate from various types of structured settlements, lottery winnings, or other financial agreements that provide periodic payments. By purchasing secondary market annuities, investors can secure a reliable income stream for a specified period while often receiving higher returns than traditional fixed-income investments.
The main advantage of secondary market annuities is the potential for better yields due to the discounted price at which they are purchased. They can be a strategic choice for retirement investing, providing stability and predictability to an investor's portfolio.
However, potential buyers should conduct thorough due diligence, as these transactions can involve complexities such as state regulations and the financial stability of the issuing insurance company. Consulting financial professionals is advisable to ensure that the investment aligns with overall retirement goals.