DCF Income Payments are existing, period-certain payment streams or lump sums sold by the original annuitant at a discount. It is this sale at a discount that creates a higher yield for the buyer.
The vast majority of DCF Income Payments were originally part of a structured settlement in a personal injury lawsuit. In a structured settlement, an annuity is purchased from a top-tier insurance company to fund the payments due to the plaintiff in compensation for settling the case.
These payments are also sometimes called ‘secondary market annuities’ simply because the existing, in force fixed payments made by the insurance company are transferred to a new payee in a ‘secondary market’ transaction. It’s important to note however that the underlying annuity does not change hands in these transactions.
You can learn more about structured settlement annuities, which are the assets that underpin the payments we make available as DCF Income Payments, on this website.
The most important thing to bear in mind with your clients is that DCF Income Payments, also known in the market as secondary market annuities, offer the benefits of a period-certain fixed income stream backed by a top-tier insurance carrier.
But as the seller is taking a discount, the end buyer’s yield is typically one to four percent higher than comparable newly issued annuities.
In the next post, we’ll give some more details about the legislated and court-ordered transfer process DCF Exchange utilizes to ensure that these payments are transferred to your clients smoothly, efficiently and irrevocably.