July 7, 2008
I've worked with indexed annuities for over eight years on the brokerage side. I've seen many different carriers come out with many different products. Yes, there are products out there that I wouldn't buy myself, but that doesn't mean that all indexed annuities are bad. What about all of the good indexed annuity products? We don't hear about the good products because everyone is so focused on the bad products. Registering indexed annuities because of the bad products that exist will NOT solve the problem.
All unregistered indexed annuities have a minimum guarantee-this is part of what makes them fixed products. Clients are not directly invested in the market with these products.
I do agree that agents should be looking for a product that is suitable for the client. Some clients do not belong in indexed annuities, some do. Not every product is for every client. This is why we have suitability. If a product is not suitable for the client, then don't use it. Carriers have rejected applications that did not pass suitability. I do believe that agents should be held accountable, but I do NOT believe that registering these products is the way to do it. Do you really want thousands of insurance agents running around with their brand new securities licenses?
The media has recently displayed indexed annuities as the spawn of satan. We only hear the negative details about indexed annuities, and the unethical agents that are out there. Yes, they exist, but not all insurance agents are unethical. What about the unsuitable sale of securities to seniors? We ALL know this happens-why not increase regulation on that?
Yes, there are agents out there who shouldn't be selling indexed products, but there are many who understand them and do a great job. So, if the agents don't understand them, let's hold them accountable-make them educate themselves or not sell them. It's just like anything else-if someone doesn't understand Long-Term Care, for example, they either become educated or they don't mess with it.
Some carriers are requiring annuity training before selling indexed annuities. There are better ways fix the problems that exist.
The bottom line is that indexed annuities SHOULD NOT be regulated by the SEC. There are better ways to handle the issues with indexed annuities.