Secondary market annuity FAQ

A secondary market annuity (SMA) is a commonly used industry term for factored structured settlement payment rights: an existing schedule of payments that originated from a structured settlement. The original recipient chose to sell some or all of their future payments for a lump sum, a court approved the transfer, and the right to receive those payments is assigned to an investor.

As the buyer, you purchase those payment rights for less than the sum of the scheduled payments and collect the difference as your estimated yield. The payments themselves are obligations of top-rated carriers such as Berkshire Hathaway, American General, New York Life, MetLife, Prudential.

No. “Secondary market annuity” is a commonly used industry term for factored structured settlement payment rights. It does not mean you are buying a new annuity contract or insurance policy, and no new annuity or insurance policy is issued to you.

Instead, you receive assigned factored structured settlement payment rights: the right to collect an existing, court-approved schedule of payments, not the underlying annuity. The payments remain obligations of the original issuing carrier. See our full disclosure for the complete framing.

The issuing insurance carrier pays you. Once the court approves the transfer and the payments are assigned to you, the same top-rated insurer that owes the payments (carriers such as Berkshire Hathaway, American General, New York Life, MetLife, Prudential) sends them to you, or to your servicer or IRA custodian, on the scheduled dates.

PSA arranges and coordinates the transfer, but the payment obligation itself sits with the carrier. That is why the carrier’s financial strength matters, and why we show you exactly who backs each stream before you reserve it.

Guaranteed streams pay their fixed amounts on fixed dates regardless of anyone’s life, so the schedule and total are known the day you buy.

Life-contingent streams pay only while the original annuitant lives. They offer a higher estimated yield to compensate for the chance that payments stop early if the annuitant passes away. That mortality risk is the single most important difference to understand, and every listing clearly labels which type it is.

A newly issued annuity is priced at the carrier’s current book rate. A secondary market annuity is an existing stream from the same class of carriers, bought at a discount on the secondary market because the original recipient wanted cash sooner.

You are not taking on more carrier risk for the higher yield, you are buying a comparable obligation at a better price. Estimated yields on PSA inventory typically run roughly 4–7% depending on the stream, its term, and its category.

The core protections are the court order and the carrier. Every stream changes hands under a court order reviewed against the applicable state Structured Settlement Protection Act, so the transfer is a matter of public record rather than a private handshake. The payments remain obligations of highly rated insurers, and historically the streams PSA has placed have paid as scheduled with no carrier defaults.

That said, these are not FDIC-insured, not bank-guaranteed, and not registered securities, and past performance does not guarantee future results. Your protection is the carrier’s financial strength and the court-approved assignment.

For guaranteed-category streams, the payment amounts and dates are fixed and continue regardless of what happens to the original annuitant. The obligation runs with the carrier. Life-contingent streams are different: they pay only while the original annuitant lives, which is why they yield more and carry mortality risk.

As for the carrier, you are relying on the financial strength of the issuing insurer, which is why PSA sources only from top-rated carriers and shows you exactly who backs a stream before you reserve it. Carrier ratings can change over time, so review the issuer on each listing.

These are long-term holdings with limited liquidity, so plan to commit money you will not need back on short notice. There is no public market and no daily price.

If you do need to exit, resale or reassignment of the stream to another buyer may be possible with our assistance, but a resale is not guaranteed, and the price it would bring is not guaranteed either. Because the payments are fixed, that value moves with prevailing interest rates. These holdings suit long-dated income goals rather than short-term cash needs. See our full disclosure on liquidity.

Before you commit, you see the full payment schedule, the estimated yield and how it is calculated, the purchase price, the issuing carrier and its rating, and whether the stream is guaranteed or life-contingent.

As a deal moves forward you also see the court-approval paperwork, the assignment documents that transfer the right to receive the payments to you, and the closing documents. Nothing is hidden until closing, and your own advisor is welcome to review any of it.

There is no fixed minimum. Because inventory is unique, each listing has its own purchase price, and streams range widely, from smaller single-tranche payments to larger multi-year schedules.

You buy a stream whole rather than a share of it, so the purchase price shown on a listing is the amount required to reserve it. Registered investors see the full price, term, and payment schedule on every deal.

Browse our live inventory to view the available income options in full, including every payment schedule and available pricing. When a stream fits, reserve it by its contract number.

Inventory moves first-come, first-served, and there is only one of each stream, so a reservation holds the listing at its quoted terms while the paperwork is prepared. From there, PSA coordinates court approval, assignment, and funding end to end.

Pacific Structured Assets does not provide tax advice, and we do not give guidance on how these assets are taxed. The treatment depends on your circumstances and how you hold the asset, and it is a question for your own tax advisor.

What we can do is give your advisor the full payment schedule and the deal documents they need to evaluate a specific listing for you. See our note on taxes and your advisor for what to bring to that conversation.

Yes, we encourage it. Pacific Structured Assets does not provide investment, tax, legal, or accounting advice, and nothing on this site is a substitute for your own advisors.

We are glad to give your advisor or CPA the full payment schedule and deal documents so they can evaluate a specific listing for your situation. Bringing your advisor in early is a good idea, not a hurdle.

A life-contingent stream pays only while the original payee lives, so we hedge each one with a life insurance policy on that payee. It carries a slightly higher estimated yield than a comparable guaranteed stream.

If the payee passes early, the stream ends and the life insurance policy pays a lump sum, structured to make the investor whole on the estimated yield for the time it was held. The hedge is designed to protect your estimated yield, not the total dollar amount of scheduled payments, which depends on how long the payee lives. Guaranteed-category streams, by contrast, pay their fixed amounts and dates regardless of anyone's life.

No. Pacific Structured Assets is not registered with the Securities and Exchange Commission and is not licensed to sell insurance in any state. A secondary market annuity is not a security, and nothing on this site is investment, tax, legal, or accounting advice.

PSA gives investors access to these factored structured settlement payment rights and coordinates the transaction. You should consult your own advisors before engaging in any purchase.

No separate fees to you as the buyer. Everything is priced into the effective yield shown on the listing, so there is no commission, application fee, or closing markup. The yield and purchase price you see are all-in.

The only additional charges are optional. If you choose to use a third-party servicer or a self-directed IRA custodian, those charges are passed through at cost, with no markup. More detail in what a secondary market annuity costs.

Yes. Many investors buy secondary market annuities inside a self-directed IRA through a custodian that allows alternative assets. The custodian holds the asset and receives the payments on the account’s behalf, and the issuing carrier has to approve the IRA as the new payee.

PSA works with you and your custodian to confirm this before a deal is finalized. PSA does not provide tax advice; consult your tax advisor or IRA custodian about whether this fits your situation. Our guide on how to title your investment covers the IRA option.

You can title a purchase individually, jointly with right of survivorship (JTWROS), through a trust or an LLC, or in a self-directed IRA. What is permissible depends on the issuing carrier, because the carrier has to approve the new payee.

We work directly with you and the carrier to determine and confirm permissible titling before a deal is finalized. This is not legal or tax advice; decide the right titling with your own advisor. Our guide on how to title your investment covers each option.

We are not just a broker. Most of the transactions we sell are originated by our affiliated funder, Catalina Structured Funding, so we source the stream, petition the court, and underwrite the file rather than reselling paper we have never examined.

Because we originate and control the transaction, we have a strong interest in it being completed correctly, and we are still here afterward to assist, including in the rare event of an issue or when you want to resell or re-assign a stream. More on that in why we are not just a broker.