July 11, 2008
Thank you for the opportunity to share my comments regarding proposed rule 151A that would require that equity-indexed annuities be treated as securities, not as insurance.
Equity-indexed annuities are insurance contracts and not securities. They should continue to be regulated at the state level, and do not qualify as securities for the following reasons:
1) Premiums paid and credited interest are guaranteed, and never will lost. They have underlying interest guarantees as required by state law.
2) Index annuities utilize the same strict suitability standards and sales practices as life and fixed annuity products.
3) Traditional fixed and indexed annuities are similar in that the insurer declares an annual interest rate - either as an expressed percentage amount or a formula relating to changes in an index.
4) The Departments of Insurance provide direct supervision over indexed annuities, just as they do over traditional fixed annuities and life insurance
4) The SECs proposed rule will be harmful to consumers, because it will reduce the number of agents who can offer them. It will add a huge burden of additional regulation and supervision, with costs passed on to consumers.
5) It will cause unemployment, and will financially damage many individuals, small businesses, and smaller insurance companies who depend upon this income for their livelihood.
6) It will give Broker/Dealers the ability to suppress a viable, valuable, and successful form of retirement savings which has and would continue to provide strong competition to those retirement savings offerings traditionally made by Broker/Dealers.
Please leave the Indexed Annuity under the competent jurisdiction of each state's Department of Insurance. That is where this product belongs.
Thank you for the opportunity to express my thoughts.