High Yield, Safe Money Secondary Market Annuities Executive Summary: Secondary Market Annuities

What Are Secondary Market Annuities? Secondary Market Annuities are guaranteed receivables Known as Structured Settlements, these are payments for damages. – Compensation includes income streams and lump sum awards – Settlements are funded with period certain annuities from top-rated carriers.

SMAs Are Guaranteed Receivables Times Change, And People Sell Their Payments – Factoring companies, like Cash-Now, JG Wentworth, Peachtree, etc – Selling payees sell their payments at a discount. Discount = High Yield For Buyers SMA purchasers become the New recipient of these Existing, in-force payment streams

Who Makes The Payments? Top Insurance Carriers Carrier A.M. BestS&P% of Cases MetLifeA+AA-19.41% PrudentialA+AA-10.81% AllstateA+ 8.97% American GeneralA+ 7.69% HartfordA-BBB+6.78% Pacific LifeA+ 4.95% GenworthAA-4.76% New York LifeA++AA+4.76% SymetraAA3.85% John HancockA+AA-3.30% Total75.27% Top 10 Carriers, From Recent Sampling of 550 cases

2.362% Interest $1,000 / mo. 20 years guaranteed Lower Yield 4.5% Interest $1,000 / mo. 20 years guaranteed Higher Yield $1,000 per month guaranteed for 20 years, for immediate annuity, joint life, 75 years old California couple vs. SMA. Rates as of 7/2014 & subject to change. SMA Offers Savings of $32,282 Primary Annuity SMA $191,571 Higher Purchase Price $159,289 Lower Purchase Price Why Does A Higher Yield Mean A Lower Price?

High Yield, Safe Money Secondary Market Annuities Typical Buyers Of Secondary Market Annuities

Who Buys SMAs? Fill Retirement & Financial Goals “I want guaranteed income of $5000/ month lasting for 10 years, starting in 2021…” “I want safe appreciation on my $250,000 IRA for 20 years…” “I want my 4 kids to each inherit $100,000 from me, in 15 years. “I want to pay my granddaughter’s college tuition with $250,000 when she turns 22 in the year 2030 What Are Your Goals?

How Can I Use Secondary Market Annuities? Many ways to use SMAs that are competitive with other safe money instruments Compare to CD’s – 5 Year CD Rate – 1.37%. – 5 Year Lump Sum SMA Rate – 4% Compare to Fixed Annuities – 6 Year Example Rate – 3.15%. – 6 Year SMA Rate – 4% Deferred income annuities- – Guaranteed lump sum instead of life only payments Legacy planning with a chosen future date Principal replacement with income stream to mimic bonds

What are some of the benefits of purchasing an SMA? SMAs can be purchased with both qualified and nonqualified funds A SMA is a contractual obligation, not a projection of return. – This takes the guesswork out of calculating expected returns All payments guaranteed by a SMA contract transfer at death to the buyer’s beneficiaries. Great for long term planning, inheritance planning, college planning, and retirement income planning

High Yield, Safe Money Secondary Market Annuities Purchase Details Of Secondary Market Annuities

What Are Inventory Terms and Purchase Amounts? Types: – Immediate Income (Starting Within 2 years) – Deferred Income (Starting Later Than 2 Years) – Lump Sums (Short Term Within 10 Years, Long Term More than 10 Years) Availability – In Stock- Close within 1-2 days – Pre Order- close in days

How Do I Read The Inventory Page?

Inventory View- View Case Details

What Is The Purchase Process Of An SMA? First, with your advisor, reserve the case. – Will Do 48 Hr Hold, But Only A Signed Purchase Order Locks Your Reservation Depending on the status (pre-order or in-stock), closing may be as little as 2 days, or as long as 60 days from reservation.

What Is The Purchase Timeline? In Stock cases are already court approved – Close as quick as 48 Hours- Review is Complete Pre Order cases require court approval + Review – 30 to 60 days is typical from reservation to closing Price Listed Online Is An Estimated Purchase Price, As Of An Estimated Close Date – Final Purchase Calculated As Of Actual Closing Day

What Is The Required Purchase Documentation? Purchase Order – Signature #1 Review Closing Book – Irrevocable Assignment = Signature #2 – Payment Servicing Contract= Signature #3 Return Signatures #2 and #3 & Wire Purchase Price – CASE CLOSED

Closing Book The Closing Book summarizes the transaction and shows the amortization schedule. It also shows all pertinent chain of title agreements and disclosures.

What Are The Documents In A Closing Book? Purchase Order Amortization Schedule Irrevocable Assignment Court Order Acknowledgement Letter Or Stipulation Original Annuity Documents Payment Servicing Contract Ask Agent For Sample Closing Book

Amortization Schedule The amortization schedule shows the investment, all payments & rate of return for a specific case. Typically, purchasers consult their own tax advisors who utilize an exclusion ratio to calculate taxable interest vs return of principal.

Can I Use My IRA To Buy An SMA? Indicate on purchase order if Qualified or Non Qualified Funds – Best to open IRA prior to case reservation. – Buyer Title is ‘Gold Star Trust FBO {Your Name IRA} You must commence funds transfer from current custodian to SDIRA upon reservation, as this process can take 30+ days

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Indicate “Non Qualified Purchase” Tick “Pre-Tax“ Box Shown Purchaser Titling is {SDIRA Custodian Name} FBO {Customer Name IRA}

What Signatures Are Required In An IRA SMA Purchase? Customer Signs Purchase Order Customer Signs IRA Direction Of Investment IRA Custodian Signs – Irrevocable Assignment – Servicing Agreement IRA Custodian Wires Purchase Price