Finance

Tips for Secondary Market Annuities

There are various companies in the present market which deal in selling secondary market annuities. These companies provide the people with a chance to sell the annuities in cash without paying a surrender fees to their insurance provider. This is a very good investment technique which can be implemented by selling these secondary market annuities to third party buyers. One must always remember that not all annuities can be exchanged for cash. Some of them are to be traded in kind. Those are the tax qualified that form the individual retirement accounts or even from their employer’s pension funds. These are the ones which cannot be transferred to another person as their return methods are not guaranteed.

Tips for Secondary Market Annuities

How are the values of the annuities determined?

The prices of secondary annuity are determined by the dollar amount which will be used to distribute it. The length of time required and also the rate of interest influence the price. There are other factors as well which influence the price. But mostly it depends on the strength and stability of the insurance company who are covering the claim. There are several circumstances which allow the owner to reap benefits by selling in such a market. Such circumstances include things like tax paid for beneficiary, the price or surrender fees and also the type of annuity which was inherited. When the person is selling these, there are selling the guaranteed returns and not the annuities themselves. While pensions grow, they continue to be tax deferred. This means that if there is a heir to this pension, then the amount will not be tax free. For those who are concerned about their successors having to pay hefty sums for tax, they can opt for life policies.

Benefits of Secondary Market Annuities

There are other options available as well where the heir will not have to pay hefty amounts of tax. There are ways to curb surrender fees as well. One would need a large deposit rather than making small monthly payments. The other option is to sell them to secondary buyers at a hefty sum of money instead of selling them to an insurance firm. Those which are inherited are usually the best as the tax charges on them are very low. Much like the other types of annuities, the most common ones are administered by insurance companies. Hence it is common for them to end up in other types of markets, especially the ones with structured settlements. The structured settlements are the ones which are awarded by the court and find their way into other markets. Most of the secondary annuities come from structured settlements of people who do not want to wait for small monthly payments. The owner is always allowed to sell them in open markets for good amount of cash or trade them for better settlements which will allow greater revenue in the future. It is a brilliant way to secure the future of a young spouse as well.

About the author

Raymond L. Torbert

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