The honest comparison

Secondary market annuities vs. a bond ladder

A bond ladder keeps your money liquid and spreads credit across issuers. A secondary market annuity pays more, an estimated 4 to 7 percent, and locks that rate for the life of the stream, so no maturing rung ever forces you to reinvest at a lower yield. Here is the trade in full.

Where each stands today

2-yr U.S. Treasury

4.14%

Short rung, fully liquid

5-yr U.S. Treasury

4.23%

Mid rung, fully liquid

10-yr U.S. Treasury

4.49%

Long rung, fully liquid

Secondary market

4–7%

Locked, limited liquidity

Treasury yields: U.S. Treasury daily par-yield feed, as of July 2, 2026.

Side by side

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	Secondary market annuity	Bond ladder
Typical yield	4–7% effective annual	Tracks the yield curve; Treasuries lower, corporates higher but usually below a payment stream
Structure	One court-ordered stream you buy at a discount	A series of bonds bought to mature on staggered dates
Reinvestment risk	None; the rate is locked for the life of the stream	Yes; each maturing rung is reinvested at whatever rates prevail then
Credit	A single carrier or state lottery; concentrated	Diversifiable across issuers; Treasuries carry U.S. backing
Government or insurance backing	Generally none for payment rights	Treasuries are direct federal obligations; corporates have none
Liquidity	Limited; no public market. Resale or reassignment possible with our help, not guaranteed	Each bond is sellable on any business day
Effort	Passive; payments arrive on schedule	You build the ladder and roll each maturing rung

What this means for investors:A payment stream usually locks a higher estimated yield than a bond ladder and removes reinvestment risk, but it does so by giving up two things a ladder keeps: liquidity and diversification. A ladder's bonds can be sold on any business day; a payment stream is far less liquid, not more. There is no public market for these payment rights, and resale or reassignment may be possible with our assistance but is not guaranteed, at a price that moves with prevailing interest rates. A common approach uses both: a short, liquid ladder for near-term needs and a payment stream for the long money you will not touch for years.

The trade, in one idea

A ladder buys you liquidity and diversification, and with Treasuries it buys you the safest credit there is. You pay for both with a lower yield and with reinvestment risk: every time a rung matures, you are at the mercy of wherever rates have gone.

A payment stream makes the opposite bet. You give up the liquidity and lean on one carrier, and in return you lock a higher effective rate for the whole life of the stream. If rates fall, you keep collecting the rate you locked. You can price any stream against today's curve with our yield calculator, and see where payment streams sit in a wider fixed-income plan on our fixed income alternatives page.

The two are natural partners. Keep the near-term money in a short, liquid ladder; put the long money, the part you will not touch for years, into a stream that locks the rate and removes reinvestment risk from the far end. It is the same complement we describe in SMAs vs. CDs and Treasuries.

Questions we hear most

Does a secondary market annuity yield more than a bond ladder?

Usually, yes. Estimated effective yields on payment streams run roughly 4 to 7 percent, above a Treasury ladder and generally above an investment-grade corporate ladder of similar quality. The premium is payment for giving up liquidity and for relying on a single carrier rather than a diversified, tradable set of bonds.

What is reinvestment risk, and how does a payment stream avoid it?

Reinvestment risk is the chance that when a bond matures, you have to reinvest the proceeds at lower rates than you were earning. A ladder faces it on every rung. A secondary market annuity avoids it because you lock a single effective rate for the entire life of the stream, so a falling-rate environment cannot erode your yield the way it can with a maturing bond.

Is a bond ladder safer than a secondary market annuity?

A Treasury ladder is safer on credit, because it is backed by the U.S. and stays liquid. That safety is real and worth paying for with a lower yield. A payment stream is not FDIC-insured or guaranty-backed and leans on one carrier, so it trades some of that safety for a higher, locked return. Which matters more depends on your need for liquidity and your view of the carrier.

Can I use both together?

Yes. A frequent approach keeps a short bond or Treasury ladder for liquidity and near-term needs, then uses a payment stream as the long rung, the money you will not touch for years, to lock a higher rate and remove reinvestment risk from the far end of the plan.

What these assets are, and what they are not

Guaranteed and life-contingent structured settlement payment rights, and lottery payment rights, represent the right to receive factored payments that Pacific Structured Assets purchases and assigns to investors through a court-approved process. They are purchased at a discount to their total scheduled payments.

These payment rights are NOT annuities, NOT insurance products, and NOT securities registered with the U.S. Securities and Exchange Commission. They are not bank deposits, are not FDIC-insured, and are not protected by any state insurance guaranty association. The industry term “secondary market annuity” refers to these payment rights and does not mean you are purchasing an insurance annuity contract.

You acquire the right to receive the payments, not the underlying annuity. The annuity itself does not change hands. Unlike the original structured settlement annuity, which may be shielded from creditors under applicable law, the assigned payment rights you purchase generally do not carry that creditor or bankruptcy protection.

Assigned annuities, offered as a separate product line, are existing insurance annuity contracts reassigned to a new owner through a change of ownership or an irrevocable change of payee.

These are long-term holdings with limited liquidity, and may not be suitable for every investor. There is no public trading market and no daily price. Resale or reassignment of a payment stream to another buyer may be possible, and Pacific Structured Assets can assist, but a resale is not guaranteed and the price it would bring is not guaranteed. Because the payments are fixed, that resale value moves with prevailing interest rates: an investor could realize a gain if rates have fallen since purchase, or a loss if rates have risen. These holdings are best suited to capital an investor can commit for the long term. Nothing on this website is tax, legal, financial, or investment advice. Consult your own advisors before investing.

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.

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Secondary market annuities vs. a bond ladder

Side by side

The trade, in one idea

Questions we hear most

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