Ask Mr. Annuity: Secondary Market Annuities, a Great Alternative to Low Interest Rate Bank Accounts

Guaranteed income, guaranteed interest, and guaranteed performance are all things we’d like to find when we invest our money. Steve Lance and Jeff Dorfman explain how an investor can find all of these things in secondary market annuities in this edition of the Ask Mr. Annuity program.

Secondary market annuities are backed by big companies like MetLife, Prudential, and American General. These are solid, reliable companies. 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. The sellers might 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 result is that guaranteed annuities backed by good companies are available for sale.


One of the big advantages of the SMA is the guaranteed interest rate available. The rates typically range from three to six percent. Steve points out that the Ask Mr. Annuity website includes a listing of SMAs that are currently available for purchase. One example of the sort of annuities available (when this program aired) was a twenty year annuity that has a purchase price of $102,000. This Prudential annuity will provide monthly payments of $640 for a period of twenty years. The interest rate is 4.5%, considerably better than bank interest.

Steve will soon be offering a new book on SMAs. However, his current book on annuities is free to download at the Ask Mr. Annuity website. There is also an Ask Mr. Annuity Facebook page. Steve mentions a ninety-second video that can be found on the website or the Facebook page. The video explains in-force annuities and how they can be a great financial solution for investors. Steve will also, on request, mail you an autographed copy of his book along with a list of SMAs currently available.

Steve points out that SMAs are something your stockbroker will probably not know about. Stockbrokers deal in variable annuities or fixed index annuities. Secondary market annuities are “a small market niche.” Investors who become knowledgeable about SMAs may find some options that can be of real value, providing guaranteed interest on investments.

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 Financial Network is a featured network of Sequence Media Group.