Subject: File No. S7-14-08
From: Gregory L. Tauber

July 8, 2008

Indexed Equity Annuities are not "Securities", they are Fixed Annuities. Some have a crediting method based on the Stock Market or other forms however they can only increase in value never decrease since there is a minimum guaranteed interest rate tied to these products which is why they are called "Fixed Annuities".

The surrender charges however is another matter all together. Many Insurance products have surrender charges other than Fixed Annuities such as Whole Life Insurance Policies, Universal Life Insurance Policies etc. etc. and they are not securities either and people can and do get less money than they put into them as well if they surrender those policies early. These surrender charges are clearly stated in each Policy by the Insurance Company issueing the Policy. It states how many years there is a surrender charge, other than that the customer cannot "lose" any money, only earn money.

As far as "Suitability" is concerned, the Indexed Equity Annuities should only be Sold or offered to the client that does not need the money back immediately or within the time that they would have any surrender charges such as 1 year or 7 or 10 years whichever the case may be and should also "Know" without a shadow of a doubt what they are purchasing. The Insurance Company should set up (if they haven't already done so) a verification system where they call each client that has purchased this type of product to ask them questions and go over the program with them to make certain that they know what they have purchased. This would be similar to a Health Verification Department for a Major Medical Plan. It would be a system where by the Insurance Company would double check and verify the Suitabilty of the product to the client. The Insurance Companies are very capable of doing this, there is no need for the SEC to do it as well or instead of the Insurance Companies as Indexed Equity Annuities are NOT SECURITIES, however Variable Annuities are and they are already under the SEC jurisdiction and people do pay fees and they do lose money with them as they are NOT GUARANTEED. This system would also weed out any "Bad" Insurance Agents or Agents in question about selling these products to people who it is not suitable for.