July 3, 2008
I have personally marketed and sold Fixed Equity-Idexed Annuities since there inception. I have NEVER received even one customer complaint regarding the purchase of these fixed annuity products over all of these years. The point of all of these proposed SEC regulations is not over whether these Fixed Annuities are truly a securities product, but whether the Agent/Insurance Companies are properly marketing and disclosing any possible surrender charges. Since the purchaser does not lose any principal or previously credited interest in this type of fixed/guaranteed annuity, even if the crediting method/Index is plumeting proves it is not a securities product. I am not aware of any "Securities" classified and SEC controlled product that has this guarantee of principal and previously credited earnings. At no time is any client's principal at risk to "market" loss in a FIXED EQUITY-INDEXED ANNUITY. The only bone of contention is that the Annuitant cannot remove, or move (more than 10%/yr. typical) of their money from this product to another investment without incurring a penalty. This Surrender Charge fee and time-frame are PREDOMINENTLY listed in every annuity application. Most of these surrender fee schedules must be specifically initialed/acknowledged by the annuitant upon application. Nearly all Insurance Companies also allow a 30 - 60 day "free look" period following the delivery of the annuity policy for the annuitant to re-examine their purchase and change their minds with a full and complete refund. Again I am not aware of any SECURITIES products that have any free-look periods or complete refunds.
The Stock Indexes are used as a crediting method/determination only. This is similiar to a variable-interest rate product with a guarantee of principal and previously credited interest. The annuitant does not own any stocks or bonds.
Ultimately Securities firms just want to have a crack at the multi-millions of dollars of Fixed Equity-Indexed Annuity business so they can increase their commissions and create millions in currently non-existant maintenance fees for monitoring customers investments.
After close examination:
1) Guarantee of principal
2) Guarantee of previously credited interest
3) Free-look refund purchase period
4) Specified surrrender schedule amount
The above features/benefits of a Fixed Equity-Indexed Annuity differentiates and defines this product as a NON-SECURITIES PRODUCT.
Please don't let the power of the SEC and the Securities Industry confuse the issues for their ultimate gain. Customers don't gain anything by SEC and securities industry oversight... they just gain red tape and ultimately larger costs/fees.