July 30, 2008
Fixed Index Annuities should never be categorized as securities. They have no additional risk compared to other fixed annuities. THey have guarantees that set them apart from securities. No doubt there have been abusive sales, but that is true of every money instrument that exists. I am a state registered IAR so making them a security would not affect my business or license requirements. I trust that you will fully investigate the product rather than rely on sensationalized media. I have seldom read an article on annuities of any kind that did not contain erroneous information. The insurance industry does not to be further complicated by blurring the line between a risk of loss and no risk of loss due to performance. Money can be lost in a stock or a mutual fund due to performance. Money cannot be lost due to performance with a fixed indexed annuity. I have many clients that are thrilled that though their return for the past 12 months was zero, they have at least as much in their annuity as they had last year. That sure doesn't sound like a security to me.
Copyright material redacted, 7 August 2008. Author referenced the following online material: Jack Marrion, Advantage Compendium - An Index Annuity Resource, http://www.indexannuity.org/consumers.htm.