Certified Pre-owned Annuities FAQ

1. What is a Certified Pre-Owned Annuity™?

A pre-owned annuity is a contract, issued by an insurance carrier, as part of a structured settlement. This contract guarantees the holder (the person who purchases a pre-owned annuity) a payment stream over a fixed term at a fixed rate of interest, typically without regard to life contingency (in other words, a certain period only).

2. How is my fixed interest rate determined?

For each Certified Pre-Owned Annuity™, the interest rate will be determined by several factors. Factors include current market conditions, Certified Pre-Owned Annuity™ term, carrier rating, and buyer acceptance. All interest rates are expressed as an effective rate compounded monthly.

3. Why is the interest rate on a Certified Pre-Owned Annuity™ higher than the rate offered direct from an insurance carrier?

Certified Pre-Owned Annuities™, as the name implies, have already gone through one previous owner. As such, certain attributes – such as payment term, payment amounts, and average life – are set and cannot be changed. In return for this diminished flexibility, a Certified Pre-Owned Annuity™ comes with higher returns.

4. Typically, what is the investment amount and term on a Certified Pre-Owned Annuity™?

While there are frequently outliers, the present value of a Certified Pre-Owned Annuity™ is typically in a range from $50,000 to $150,000 and terms range from five to twenty years.

5. What are some of the benefits to investing in Certified Pre-Owned Annuities™?

Certified Pre-Owned Annuities™ are great investment vehicles for conservative mindsets. Since the money inside your Certified Pre-Owned Annuity™ is invested by large, well-rated insurance carriers, you will find that those monies are often found in government securities and high-grade corporate bonds with strong guaranteed interest rates. Your Certified Pre-Owned Annuity™ will also provide above-average returns when compared to the fixed income portion of your portfolio.

6. What are some of the risks to owning a Certified Pre-Owned Annuity™?

No financial product is risk-free. The security of the underlying annuity will always be tied to the health of an issuing insurance carrier and therefore inseparable from that carrier’s ability to pay claims. A Certified Pre-Owned Annuity™ will never be a deposit covered by the FDIC. A Certified Pre-Owned Annuity™ must be held to term and should not be considered a liquid investment. Currency risk applies to foreign buyers, as every Certified Pre-Owned Annuity™ is offered in U.S. dollars only. Lastly, all traditional risks apply with regards to hedging against current market interest rates.

Certified Pre-Owned Annuities™ offer you guaranteed future payments from some of the same highly rated insurance companies but with a significantly higher rate of return than with a new direct purchase! All of these policies are in-force. They are being transferred by the annuitant pursuant to state structured settlement transfer laws. Please note that with all Certified Pre-Owned Annuities™ offered by a State Lottery there is a mandatory 25% federal income tax withholding. Some states also impose an additional 5% withholding.

Please Login or Register

NEW! Client Presentation Piece!