July 30, 2008
With 25 years in the insurance and securities business I have been wondering why EIA's were not classified as Security. As a Senior Partner with a large Insurance Company most complaints we run across are from the public on EIA's. The small print on how they calculate the returns, how the guarantees are applied, and most of all the extremely long surrender charge period on many of the products. We need regulation when there are EIA's that pay 12% commission and have 15 year surrender charges, Who is benefiting from the product? not the consumer. To many times I've heard agents being thankful that the EIA's are under state supervision which leads me to wonder why, less chance of being properly regulated. This product has been known for to long as a cash cow for a minority of agents in our industry looking to make a large commission and not looking out for the clients best interest. My question to agents has always been if EIA's paid the same commission as a high quality Fixed Annuity or Variable Annuity with reasonable surrender charges, which one would you present to your parents?