October 29, 2008
As an insurance agent with over forty nine years experience in selling fixed annuities, I feel comfortable in offering a fixed indexed annuity only to a client who has the ability to appreciate the pros and cons of having the interest earned on their annuity based on either an interest rate that is tied to an outside index or having the insurance company set an interest rate that they determine. Also, the fixed indexed annuities that I have offered my clients all have a feature that allows the annuity owner to select a guaranteed fixed account where they will recieve the interest guaranteed by the insurance company for any year that the annuitant does not want their interest determined by an index.
There are two basic areas I make sure that my client thoroughly understands before I will accept the premium for any annuity and the first is that the annuity is NOT a savings account at a bank and does have surrender charges for withdrawing money over and above the guaranteed withdrawal allowed by the contract.Secondly ,if it is a fixed indexed annuity and if they decide to put all or part of the money they allocate into an indexed account, they may not earn any interest for that policy year, but they cannot lose their principal. This is unlike variable annuities which are security based investments.
The reason I feel comfortable offering fixed indexed annuities is due to the fact that, even with years of experience selling annuities, before I am able to offer the particular insurance company's fixed index product, I am REQUIRED to take an extensive training course, including a written graded examination, verifying my expertise with the product.
I hope that these points will be taken into consideration when considering regulating a product that is already strictly regulated by all fifty states.