September 3, 2008
I made a career change 3 years ago after selling a successful business I owned for 11 years. I am raising a family of four, and as with anyone else, it has not been easy or without financial challenges. I became a Life Insurance professional in June, 2006. The main reason I chose this profession, rather than a securities profession, is because of the guarantee's offered through insurance products, especially Index Annuities. Had I became a securities licensed professional, I would have had to learn how to rest my head on my pillow at night, knowing that perhaps, I had just lost my clients hard earned money, perhaps his/her retirement portfolio, because of circumstances that were out of my control (terrorism, oil instability, Enron, etc). Securities are not protected from downside risk, where Index Annuities have protection from the downturns of the market. Both the design and sale of Annuities are highly regulated by state insurance departments as are the companies who manufacture and sell them. State insurance regulations cover, among other things, suitability of insurance agent recommendations regarding Annuities, Annuity disclosure and advertising, agent licensing and training, unfair trade practices including misrepresentations of product and terms and conditions, and enforcement actions and penalties for noncompliance with sales practice requirements. In addition, guaranteed minimum values for Annuities are regulated through the Standard Nonforfeiture Law and are applicable to all fixed Annuities. The security regulation will add little benefit to consumer protection, as many states have already adopted the NAIC Annuity Disclosure Model Regulation and most, if not all, of the major index carriers have mandated the use of a disclosure statement or certificate describing all important terms and conditions of the annuity contract, including prominent disclosure of surrender charges. Many, if not all, major indexed annuity carriers conduct suitability reviews of all sales in all states. Suitability reviews required of brokers under FINRA rules would not add any meaningful protections over and above what is already being done. I truly hope you reconsider your thought process regarding this very important ruling which will in turn affect my ability to raise my family.
Sincerely,
Kirk Cox