STRUCTURED SALE OPTIONS
Three ways to receive your sale
Every option guarantees your principal through a life insurer. They differ in how payments grow and when they start.
Equal payments with interest.
The fixed option is the traditional structured installment sale. An annuity from a life insurance company pays you on a level schedule at a rate set at closing, and payments start within a year of the sale.
- Growth: Fixed rate, locked at closing
- Payment start: Within one year of the purchase date
- Payment schedule: Substantially equal, at least annually
- Principal: Guaranteed by the insurer
- Funded by: Annuity contract
Principal Interest
Illustration, not a projection.
Why payments start within a year
The annuity is owned by the assignment company, not a person. To avoid annual tax on the annuity's buildup under Section 72(u), it must be an immediate annuity. That is why traditional SIS payments start within one year and follow a level schedule.
What the rate looks like
The rate is fixed at closing and doesn't move with the market. It typically tracks close to prevailing Treasury yields. Your actual rate comes from a quote at the time of sale.
If you die before the payments end
Payments can’t be tied to your life. Any guaranteed payments still unpaid go to your named beneficiary or your estate.
How the payments are taxed
Each payment is part interest, part return of your basis and part gain. The interest is taxed as ordinary income, and the gain is taxed as it arrives under IRC §453.
WHO IT FITS
Sellers who want income soon and a payment they can count on.
THE TRADE-OFF
Payments don't grow with the market, and the schedule can't be changed once the sale closes.
Market-linked growth, protected from loss.
The indexed option links the growth of your payments to a market index. Your guaranteed payments are set at closing. They can rise in years the index gains, and they don't fall in years it drops.
- Growth: Linked to a market index, with a limit
- Downside: 0% floor: no losses credited
- Payment start: Can be deferred to a date you choose
- Payment schedule: Set at closing; lump sums, uneven payments or step-ups
- Principal: Guaranteed by the insurer
Principal Interest
Illustration, not a projection.
Gains add to your payments
In a year the index rises, your future payments grow, and the higher amount becomes your new guaranteed base.
Losses count as zero
In a year the index falls, the loss is treated as no gain and your payments stay where they were. Once a payment has grown, it never goes back down.
What's set at closing
You choose the timing and pattern of payments before the sale closes. After that, only the amount moves, and only upward, with the index.
How the payments are taxed
The gain is taxed as each payment arrives under IRC §453. Index growth is paid as part of your scheduled payments and taxed as ordinary income when you receive it.
WHO IT FITS
Sellers who can wait for income and want a chance at growth without risking what’s guaranteed.
THE TRADE-OFF
Less certainty about the final total than the fixed option gives.
Flexibility to fit your exact needs.
The customized option is MetLife's Structured Installment Sale Flex Agreement (SIS-FA). It pays a fixed rate like the traditional SIS, but it's funded by a funding agreement instead of an annuity. That lets payments start when you choose and follow the pattern you need.
- Growth: Fixed rate, locked at closing
- Payment start: Deferred, on a date you choose
- Payment schedule: Lump sums, uneven payments or annual step-ups
- Principal: Guaranteed by the insurer
- Funded by: Funding agreement
Principal Interest
Illustration, not a projection.
Why it can wait to start
A funding agreement is not an annuity. MetLife's position is that the Section 72(u) one-year limit therefore doesn't apply, which is what allows a deferred start.
The §453A interest charge
If your installment obligations top $5 million, the charge applies every year until payments begin, because the deferred gain doesn't shrink in the meantime.
Tax on interest you haven't received
If interest builds up during the deferral instead of being paid at least once a year, you may owe tax on it before you get it. Ask how the interest is stated.
If you die before the payments end
Payments can’t be tied to your life. Any guaranteed payments still unpaid go to your named beneficiary or your estate.
WHO IT FITS
Sellers who don't need the money for years and want to plan around retirement or other income.
THE TRADE-OFF
Funding agreements may not be available in every state, so confirm availability for your sale.
HOW EVERY OPTION WORKS
- STEP 1Agree on paymentsYou and the buyer add the payment schedule to the purchase agreement.
- STEP 2Buyer pays a single sumThe buyer pays an assignment company, which takes over the payments.
- STEP 3Payments are fundedThe assignment company buys a contract from a life insurer to match them.
- STEP 4You get paidThe insurer sends your scheduled payments for as long as the schedule runs.
See which option fits your sale
Book a 30-minute call. No pressure — ask questions, get answers.
Guarantees depend on the financial strength and claims-paying ability of the issuing insurer. This page is general education, not tax advice. Review any structure with your CPA and attorney.