July 10, 2008
The SEC should stay in the business of regulating securities and stay out of the business of trying to regulate insurance products. Creating additional government bureacracies to deal with managing further licensing requirements and additional regulation of insurance professionals will not help protect the public from unscrupulous actors. There are insurance sales people that try to get clients to invest in products they shouldn't, just as there are stock brokers who put clients in certain products for their benefit rather than their clients. Making any decision based on a Dateline episode about poor seniors who didn't understand the product they were buying is ludicrous. Such news reports are edited for ratings value and not accuracy.
The insurance industry is regulated and there are avenues by which to seek redress if you feel you were treated unethically by an insurance professional. I wish that government bureacrats at the federal level would stop making decisions based on knee-jerk reaction to salacious news stories. Annuities are generally not a short-term investment and no company is going to give you a 10-15% bonus plus a guarenteed 5% a year without having some early withdrawl penalities. Most cases that I have read about where a senior was complaining about being take advantage of by a insurance sales representative are really just people who are complaining because they couldn't have their cake and eat it too.
Indexed annuities are a safe place to protect assets against inflation and volatile markets. However, these benefits come at the expense of some concessions to the carriers. Mainly, that such products are a long term proposition and liquidity is often sacrificed for guarenteed returns and protection of principal. Any person who doesn't realize this even after the most simple internet search is a MORON. The government shouldn't and ultimately can't protect such consumers from the ignorance and adding more regulations and restrictions to the insurance industry ultimately will only cost the tax payers money that could have been spent more wisely elsewhere.