September 7, 2008
I am a registered representative and licesened insurance agent. I have attended various seminars given by insurance companies which promote indexed annuities. The presentation always sounds like a great product and I feel I have not been mislead in the disclosure that the product is a fixed annuity guaranteeing a base interest rate with possibility of getting a higher credit due to the associated index. However, I feel that many non-SEC licensened insurance agents look at the product as an opportunity to compete with mutual funds and variable annuities and very likely do not fully make clear to clients that in event of down or low markets, the credited interest rate would be low. Also not always clear to the purchaser, is that there are caps which can be adjusted at the will of the insurance company on what percentage of the market gains, if any, will be credited to their account.
Indexed annuities are fine products and quite suitable for many people, but often presented as an opportunity to receive the gains of the stock markets without the loss of principle, which is misleading. I also feel, and have experienced, non-SEC licensed insurance agents, run down variable products making prospective purchasers feel that variable products higher risk than they really are. I feel registerd representatives have a greater understanding of variable products and are much more qualified to disclose risks and compare products to the prospective purchaser. I am in agreement that indexed annuities should be sold by SEC licensened individuals.