August 8, 2008
The proposed rules would have the following benefits:
Regulated as registered securities, the product expenses of indexed annuities would be limited . This is good for the public. IMOs and the industry can adapt to the lower margins, just as the mutual fund industry did. I believe the product provides meaningful guarantees, which the public desires, and would continue to be popular. The sky is not falling.
However, if the SEC over-reaches with this rulemaking, and causes the product to be a "separate account" or somehow no longer subject to minimum non forfeiture laws, then state guarantee funds will no longer apply. This would damage the public interest and cause great confusion, since the client is ultimately buying "guarantees."