September 2, 2008
As an insurance producer, I am asking for an extension for comments regarding the SEC Proposed Rule 151A. I believe index annuities are insurance products and should remain as such. Index annuties, like traditional fixed annuities guarantee a minimum interest crediting rate. They also offer the consumer a strong minimum guarantee backed by the insurance company.
The design and sale of annuities are highly regulated by state insurance departments, as are the companies who manufacture and sell them. In addition, guaranteed minimum values for annuities are regulated through the Standard Nonforfeiture Law and are applicable to all fixed annuities.
The securities regulation will add little benefit to consumer protection. Many, if not all, major indexed annuity carriers conduct suitability reviews of all sales in all states. Suitability reviews required of brokers under FINRA rules would not add any meaningful protections over and above what is alredy being done.
The guarantees provided by an indexed annuity offer consumers significant protection against investment risk. The DJIA has suffered a decline in excess of 20% since 10/07, yet a fixed index annuity purchaser would lose no principal due to such market performance, unlike someone who has money in a security, mutual fund or variable annuity. The annuity interest crediting formula protects the owner against loss due to drops in the index over the crediting period and while the guarantees provided certainly come at a price, this is fully disclosed to the purchaser. I also make it very clear to my clients that index annuties are not designed to make them rich but to provide a safe, secure option for preserving their assets.
So in conclusion, thanks for allowing me to express my thoughts on this important issue.
Sincerely,
Linda Ness