October 14, 2008
I have sold annuities for over 30 years. Money in an indexed annuity is not invested in the stock market. The principal is not subject to investment risk. It is an insurance product, a fixed annuity. The insurance company determines the amount of interest to be credited each year by using an outside index. If the insured/annuitant leaves the money alone for the product term (typically 3-10 years), all products that I am aware of guarantee a minimum of return of principal, with most guaranteeing a minimum interest rate in addition to that. That does not sound like any "investment security" that I ever heard of. The attraction of an indexed annuity is the possibility of higher interest rate credits than the typical fixed annuity currently offers. The SEC should regulate securities, instruments where clients have money at risk. If indexed annuities are securities, then all insurance products are securities, which is simply not the case. Now, having said that, I believe in strong state regulation, and penalties for unscrupulous sales behavior. States have such programs in place already, and are looking at even stricter guidelines. This is fine with me, I don't want crooks in my business. But please do not start down the road of even more regulation, and a change from the current state supervision. Thank you.