Choosing a company
How to choose a secondary market annuity company
The single most useful question is whether you are buying from a broker or a direct funder. After that: is the carrier named with its rating, is the full schedule disclosed, is the pricing all-in, and is anyone there after the sale. Here is how to tell a reputable company from a reseller.
Broker or direct funder
Most of the difference between companies in this market comes down to one thing. A broker arranges your purchase through a third party. It markets streams it did not originate and often has never examined, and once the sale closes, it moves on. A direct funder is the party that sourced the stream, petitioned the court, and underwrote the file, and it keeps a stake in the transaction being completed correctly.
That distinction is not about good or bad companies. It is about who has actually stood behind the paper. Most of the streams we place are originated by our sister company, Catalina Structured Funding, so we control the asset from origination through court approval and underwrite every file ourselves: court order, assignment, carrier obligation, and chain of title. When we place a stream from another originator we have a relationship with, it clears the same underwriting standard before it reaches inventory. You can read more about how that origination works on our underwriting and origination page and about the affiliate relationship on our about page.
Plain-English version: A broker finds a deal someone else put together and passes it along to you. A direct funder is the company that built the deal from the start, took it through court, and is still reachable years later if something needs sorting out. When you can, buy from the people who were there at the beginning.
What to check before you buy
Broker or direct funder
Ask who sourced the stream and petitioned the court. A direct funder underwrote the file; a broker is reselling paper it never examined.
The carrier is named, with its rating
Every listing should show the exact issuing carrier and its financial-strength rating before you commit, not after.
The full payment schedule is disclosed
You should see every amount and date, the effective yield, the purchase price, and the weighted average life up front.
Court approval is explained
A reputable company can walk you through the court-approval process under the applicable state Structured Settlement Protection Act.
Pricing is transparent and all-in
The yield you see should be the yield you get, with no separate commission or markup buried at closing.
Someone is there after the sale
Splits, servicing, and any future resale are easier when the people who structured the deal are still the ones you call.
Warning signs
None of these mean a company is dishonest, but each is a reason to slow down and ask more questions before you commit.
- Vague about which carrier actually backs the payments, or reluctant to show the rating.
- Blurs the line between an insurance annuity contract and assigned payment rights.
- Will not show you the full payment schedule before you commit.
- Evasive about liquidity, or implies the payments carry FDIC or guaranty-association protection.
- Pressures you to move fast without answering questions about the court process.
The antidote to all of them is verifiable transparency. Every listing we publish names its carrier and rating and shows the full schedule, and you can check the effective yield on any of them yourself with our yield calculator. If a distinction ever confuses you, our guide to whether an SMA is actually an annuity spells out what you are and are not buying.
Questions we hear most
What is the difference between a secondary market annuity broker and a direct funder?
Is it better to buy from a direct funder?
How do I know a secondary market annuity company is legitimate?
Should I compare quotes from multiple companies?
Pacific Structured Assets, Inc. does not provide tax, legal, financial or accounting advice. The material on this website has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal, financial or accounting advice. You should consult your own tax, legal, financial or accounting advisors before engaging in any transaction, including the acquisition of factored structured settlement payments. Pacific Structured Assets is not registered with the Securities and Exchange Commission and is not licensed to sell insurance in any state.
Pacific Structured Assets
Work with the team that underwrote the file.
Register free to see live listings with the carrier, rating, and full payment schedule, from a direct funder that is still here after the sale.