July 14, 2008
Comments attached: Equity Indexed Annuities should not be treated as securities, but as insurance type products. There is no risk to owner principle on these annuities and are currently available with no up front fees, annual charges, me fees. They provide individuals a viable alternative to the risks of the stock market.
If such products are put under the umbrella of broker dealers, and treated as securities, costs to issue these annuities will increase, and such fees will be inevitable. This is exactly what the broker dealers are hoping for. To be able to control a significant market that has been out of their reach, and quell most of their competition that has taken a large amount of invested funds out of the securities market and into the insurance company markets. It has nothing to do with the "Risk" of the product but more the money they are losing to the insurance companies.
What should be implemented is suitability regulation to ensure purchasers of the products understand the provisions and surrender charges, and possibly eliminate products with surrender charges beyond 10yrs.
Again, the equity-indexed annuities should remain as insurance products and not be treated as securities.
Thank you.