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Secondary Market Annuity Videos

This video explains Secondary Market Annuities or In-Force Annuities in a nutshell. Call us today to reserve your SMA!






From our Radio Show on September 30th 2015. Stock market fluctuations in recent weeks have underscored the importance of having solid and secure investments for the retirement years. In this edition of the Ask Mr. Annuity program, Steve Lance and Jeff Dorfman explain how an investor, retiree or not, can find get guaranteed returns on investments at good interest rates in secondary market annuities.

Steve points out that secondary market annuities provide a relatively high rate of return. An investor can get a good deal financially by investing in a secondary market annuity. Secondary market annuities (SMAs) are existing annuities that the initial annuity beneficiaries have chosen to liquidate. Very often, an annuity beneficiary will encounter a problem that requires some immediate cash rather than long-term payments. Some SMAs are immediate annuities that the owners have chosen to sell for cash. The sellers might also be lottery winners or personal injury victims who got structured settlements.

Companies like J.G. Wentworth advertise to purchase annuities and turn them into lump sums of cash. The seller gets a lump sum payment, less a discount to the buyer, and the buyer of the annuity then has an existing annuity to sell. The payment terms and interest rate are already established. The interest rates on these annuities typically are in the four-to-seven-percent range. The result is that guaranteed annuities backed by big companies are available for purchase by investors.

As an example of the kind of SMA that may be available for purchase, Steve discusses an SMA issued by GE Capital. This particular SMA has a purchase price of $199,000. But the return on investment is great. A purchaser would receive 188 payments of $842 each month, plus a $25,000 lump sum of cash. This annuity starts payments in October, 2017. Someone two years from retirement who wanted an income stream could convert an IRA or 401(k) account—or even a savings account—into this SMA. The rate of return is about 4.8%.

Steve points out that this is a great rate of return in an economy where interest is almost nonexistent. Steve adds that this particular SMA features a 3% cost-of-living adjustment (COLA). This SMA would provide payments for sixteen years, a total return of $372,000 on the investment of $199,000. Jeff notes that the COLA is not always a feature of investments, but this is a very desirable feature to have. This particular SMA almost doubles the cost of investment over the course of the payouts. The Ask Mr. Annuity website includes a listing of SMAs that are currently available for purchase.

Steve says that SMAs can be a good investment for anyone, including people in their forties who are years away from retirement. Some of these annuities do not begin payments for twenty years, so they would be very good investments for someone wanting to plan ahead for retirement. Jeff and Steve also point out that they purchase annuities themselves. So someone with an annuity who needs cash can contact them (call them at 866-551-2522) to arrange to convert the annuity into cash.

Steve also mentions an SMA from The Hartford available for $76,000 that pays a 4.25% interest rate. This SMA has 204 monthly payments of $569 starting in two years. The total return would be $116,076. This would be a good investment for someone who is 63 and wants to arrange for an income stream to start at retirement. This is a good rate of return and is a great addition to a portfolio that includes equities and bonds.

Steve Lance has been a teacher, a financial analyst for GE Capital, and is the author of "Annuities: The 21st Century Pension Plan." Steve Lance along with his co-host Jeff Dorfman ask and answer questions each week that are the concerns of today’s savers retirees on  Ask Mr Annuity.


The Federal Reserve will reconvene this September to discuss raising the discount rate. If the rate goes up, the stock market will likely slip. How can investors protect themselves? In this Ask Mr. Annuity program, Steve Lance and Jeff Dorfman discuss secondary market annuities.


Steve points out that a lot of seniors have their money sitting in CDs and money markets that pay almost no interest. They are having to tap their capital to live on. Higher interest rates could affect bonds, commodities, and equities. A secondary market annuity is a good and safe way to get a reasonable return on investment.

A secondary market annuity is one that is already in existence and is being resold. It will be retitled into an investor’s name. Many of these are bought by hedge funds or pension plans. These entities are looking for guaranteed payouts and higher yields than are currently available in the market. These same investments are available to ordinary investors.

For example, a 65-year-old investor with $120,000 in a CD, earning essentially nothing, could get a secondary market annuity with the Athene Life Insurance Company of New York that would provide a monthly payment of $1,000 for ten years. That’s a rate of four percent compound interest, a considerably better rate than is available in a CD or a money market account. It’s an easy way to get interest today.

Steve and Jeff point out that information about these annuities on the Ask Mr. Annuity website. Athene is a solid company, a huge company that is A-rated. Comparison shoppers looking for the best return for their money will find that the secondary market annuity is a much better investment than a CD or money market. These annuities are guaranteed.

There are all kinds of annuities with different payout provisions. Some of them pay out lump sums from time to time and pay out more money closer to the end of the annuity term. Steve explains an annuity that pays a much higher interest rate but does not provide a monthly income stream. Such an annuity could be a great legacy for family members. Steve and Jeff can be reached at (602) 795-6425.For more information, go to

Mr. Annuity’s Jeff Dorman reports that a fortune cookie advised him that “The stock market may be your ticket to success.” It’s apparent that people who listen to what fortune cookies tell them may lose a lot of money. Dorfman says that Ask Mr. Annuity “is based not based on risk, but reward.” Steve explains where those rewards can be found in this report.


Steve says that his book, “ Annuities: The 21st Century Retirement Plan,” was written for all the people who lost trillions of dollars during the 2008-2009 financial crisis. The whole point of the book is to explain how people can put money away so that income is guaranteed for them when they retire.

An annuity, Steve says, is a contract with an insurance company that can take the place of a pension plan for the 80% of Americans who no longer have one. Annuities come in several forms. One is a fixed annuity, which works somewhat like a certificate of deposit. Another type of annuity is a variable annuity, often sold by stockbrokers. It allows an annuity holder to gain when the stock market goes up, the holder is exposed to risk if the market goes down. Steve points out that the market goes up and down, and in the last ten years, there have been two major corrections in the market, plus the current turbulence in the market because of developments in China.

In 1996, the insurance industry devised the fixed indexed annuity. These products eliminate the volatility of the variable annuity while providing a better rate of return than the fixed annuity. The fixed indexed annuity allows the holder to benefit if the market goes up but avoids the penalty if the market drops. And these annuities don’t have fees. “It gives you not only a guaranteed return of your money but a guaranteed return on your money.”

Sometimes people with 401(k) or 403(b) plans don’t know where they can safely move their money. Steve explains that setting up a fixed indexed annuity while one is still employed is a great way to guarantee that there will be a good return on retirement. As Jeff notes, this is a savings plan, not an investment plan. The fixed indexed annuity guarantees a return and eliminates risk. The term can be from five to fifteen years.

A holder can take money out immediately or let it grow for a while. Since this is a tax deferred situation, no taxes are due until the money is withdrawn. This instrument offers triple compounding, a great way to build wealth. Another benefit is that you can receive a bonus when you open a fixed indexed annuity. Some companies will offer a six percent premium bonus (if you invest $10,000, you get an immediate $600 bonus added to your payment). And the insurance company may pay a bonus for as long as three to five additional years.

A young saver might want to start with a $100 monthly payment into the annuity, which the insurance company would automatically withdraw each month. If you change jobs, you can roll over your 401(k) or 403(b) into a fixed indexed annuity.

As to getting your money out of the annuity, Steve explains that people need to reach age 59-and-a-half before they start withdrawing because of government regulations. A retiree can set up a withdrawal of a certain percentage of the annuity each month, to be automatically deposited in the bank. If you die before the money is all withdrawn, the balance goes to beneficiaries.

Another choice is to receive income for life. The insurance company will pay a determined benefit for life, and you can include your spouse, if you desire. A guaranteed income benefit may come with a fee to the insurance company because it is taking a risk on how long the holder will live.

Another option is to remove all the money when the annuity matures.


Secondary market annuities—SMAs—are annuities already in force that are available for purchase. Jeff Dorfman and Steve Lance explain how SMAs work and the investment advantages they provide in this Ask Mr. Annuity program.

A secondary market annuity is a plan of guaranteed payments that is insulated from the stock market fluctuations that have made so much news in the past couple of weeks. The benefit payments might commence immediately or start sometime in the future. What distinguishes an SMA from other annuities is that it is already in existence. The annuity might have been the payout to a lottery winner who suddenly wants cash rather than an income stream. It might have come from a personal injury case where the damages were paid in the form of a structured settlement annuity.


An SMA arises when someone sells some or all of the payments from an annuity to company like J.G. Wentworth, whose ads most of us have seen. J.G. Wentworth may buy an annuity and then sell it, retitling the proceeds in the name of the new buyer, to create a secondary market annuity. Ask Mr. Annuity also buys annuities for resale.

Steve says there are a lot of good examples of how an SMA can be a good investment. He cites an annuity from Genworth Life Insurance for $56,000 and receive an effective, guaranteed 6% rate of return. That is a much better rate than is typically found in the market. That particular annuity pays out over a twenty-year period. And, as Steve points out, there is no age restriction on buying an SMA.

The Genworth annuity would start immediately. However, Steve says, there are a number of SMAs that don’t start immediately. For someone who is 45 or 50 and wants the payments to start in 20 years, there are SMAs that would fill that need. Steve mentions that there is a list of these SMAs on the Ask Mr. Annuity website.

Steve also discusses an annuity that is involved with a structured settlement. The sale from the original annuity beneficiary has to be approved by the court as being in the best interest of the beneficiary. The court’s approval gives some added protection to the SMA buyer. Steve discusses one SMA that whose payments won’t start for 20 years. For a purchase price of $128,000, the SMA carries a return rate of almost 7%. The total return would be $701,286!

Jeff points out that Ask Mr. Annuity will buy an annuity and provide immediate cash or will sell a secondary market annuity to provide a secure income stream.

Steve and Jeff can be reached at (866) 551-2522.