August 21, 2008
I've been in the financial services industry for 23 years as both agent or manager for a large insurance company to an independent agent/financial planner for the last 10 years.
I've come to meet a dozen or more people (some in their 80's) with fixed indexed annuities and in my discussions with them about their contracts have found in every single case, the individual did not understand their contract. Specifically, they did not know of the 14 year surrender charge beginning at 15% or higher. Not in any single case was the policyowner satisfied with their return, and upon calculating the return from the beginning policy I've never seen more than approximately 5% annualized return.
I've regrettably sold 2 of these type contracts with 6 year surr period) and have regretted and eventually replaced both of them. I also have company wholesalers contact me weekly to offer these contracts to my clients as they often begin with the hugh commission I'll be paid.
I cannot, with clear conscience, offer these type contracts to anyone and will not consider them. They need to be regulated to a much higher standard than currently regulated by the individual state insurance departments which are usually overwhelmed with claims and work.
I support federal oversight by the SEC for thie fixed indexed annuity contract. When the agent claims the policyowner will 'get all the market upside without any downside risk' they need to answer to the SEC.