What is a Secondary Market Annuity?

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

What Are Secondary Market Annuities?

Secondary market annuities (SMAs) are annuity contracts originally issued to an individual which are then sold to another buyer. They’re not new contracts but rather existing ones where the payment stream is transferred to the new owner.

Annuities Explained

How Do Secondary Market Annuities Work?

  1. Original Issuance: An annuity is first issued by an insurance company to an individual.
  2. Reason for Selling: The original annuitant may decide to sell their annuity for a lump sum of cash.
  3. Transfer Process: The annuity is sold through a broker or a company specializing in these types of transactions.
  4. New Owner Benefits: The new owner receives the future payments of the annuity, often at a discounted price compared to the original value.
Secondary Market

Advantages of Secondary Market Annuities

  • Higher Yield: Often offer higher yields compared to new annuities.
  • Price Discount: Purchased at a discount, providing better value.
  • Predictability: Provides a fixed income stream.
What Is A Secondary Market Annuity

Risks and Considerations

  • Liquidity: Less liquid than other investments.
  • Complexity in Transfer: Legal and financial complexities in the transfer process.
  • Company Solvency: Dependent on the financial health of the issuing insurance company.
Secondary Market Annuities

Comparison of SMAs and Traditional Annuities

FeatureSecondary Market AnnuitiesTraditional Annuities
YieldTypically HigherVaries
Purchase PriceDiscountedFace Value
Payment StreamFixed, Pre-DeterminedDepends on Contract
Transfer ProcessMore ComplexStraightforward
Secondary Market Annuity


Secondary Market Annuities offer a unique opportunity for investors looking for higher yields and a predictable income stream. However, it’s essential to understand the complexities and risks involved. Ensure to assess your financial goals and consult with a financial advisor to determine if SMAs are suitable for you.

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Frequently Asked Questions

How do SMAs differ from traditional annuities?

SMA is bought in a secondary market, while traditional annuities are bought directly from an insurer.

Answer the following in the least amount of words: How are SMAs bought and sold?

SMAs are bought and sold in the secondary market through licensed brokers.

What is the secondary market for structured settlements?

The secondary market for structured settlements refers to a marketplace where individuals can sell their future structured settlement payments to receive a lump sum of cash from investors or financial institutions.

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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