Secondary Market Annuities, in a nutshell, offer the highest fixed income, period certain income available anywhere.
SMAs are discounted receivables. They are nothing more than guaranteed payments tomorrow, available at a discount today.
These are not what you normally associate with annuities. Most annuities are complicated contracts with riders, contractual terms, guaranteed rates, variable indexes, and a host of other complex terms.
An SMA is, by comparison, a really simple transaction.
Let’s look at an example case
$1000 per month for a 120 months starting 6/1/15 thru and including 5/1/25 costs $91,656 today.
That’s all there is to it. It’s a definite, guaranteed payment stream with definite dates of payment. To calculate the purchase price, we apply a discount rate to those payments, and the result is the purchase price today.
The real value comes however when you compare this to period certain annuities, like a 10-year SPIA.
If your client is looking for $1000 per month, they will find that the exact same 10 year guaranteed income stream would cost $110,254 based on today’s rates if they bought a SPIA.
But we can save your clients over 20% for the exact same income, and often from a higher quality credit carrier…
This is not too good to be true, and it may not last forever, but it is here now. And it’s up to you to set your clients up with this opportunity right now!
Now, these payments are not for everyone. If your client is specifically looking for lifetime income, they must pay some premium for the insurance carrier to pick up their longevity risk. An SMA will not pay for a lifetime. They are period certain payments only….
But for many people, the idea of forfeiting their hard earned money to an insurance company if they ‘die early’ is just out of the question.
For those people, secondary market annuities are perfect. No one takes your money away from you. These are guaranteed payments, and pay to you, or your heirs, or your children, or whoever you specify.
With Secondary Market Annuities, there’s a lot of possibilities!
I hope your mind is spinning with the possibilities… Just think of the wealthy clients you have who might want to leave an inheritance to their grandchildren…
Think of the institutions you have who need a stable yield for their portfolio…
Think way outside the box, of your homeowners’ association who needs to replace a roof in 25 years and needs and guaranteed return on investment for that capital replacement in the future…
Think of the young doctor who is risk averse, who just wants a solid yield on his savings in his IRA with no management fees…
Secondary market annuities can be used in all these scenarios…
We just gave you a teaser of our case studies that will come in another post. We have sold secondary market annuities to all of these kinds of buyers, and many more.
In the next few posts, we will give you many more ideas and examples, so stay tuned.
Give us a call with any questions, client scenarios, or ideas and we will get you pointed in the right direction.