Indexed Annuities

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PostPosted: Mon Oct 06, 2008 12:59 am   Post subject: Indexed Annuities  

I received in the mail the other day information on Indexed Annuities. I was wondering if anyone heard that they were changing the rules on agents selling this type of Annuity. As it stands now, any agent without a securities license can sell it but the SEC wants to change that. They want anything connected to a variable product sold only by Licensed agents. I am assuming that this would affect anyone specializing in this product, especially if they are not licensed. Are there any comments about this?



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PostPosted: Mon Oct 06, 2008 10:26 am   Post subject:   

Michael the SEC has proposed Indexed Annuities to be classified as "securities."



An Indexed Annuity is not a security nor is it a variable annuity, it's a FIXED annuity. They are regulated by the department of insurance in each and every state.



I'm always amused by stock brokers who lose client's money all the time yet want to be engaged in the insurance side of the financial services industry.



As recent events have unfolded it's quite clear neither bankers or brokers have proven to be very good money managers.



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PostPosted: Mon Oct 06, 2008 1:51 pm   Post subject:   

Yes Gary I agree. I receive the Agent's Sales Journal and they wrote the following which just got be thinking.



"If the National Association of Securities Dealers' Notice to Members 05-50 three years ago was any hint that regulatory agencies were beginning to scrutinize index annuities, there can be no mistaking their intent today. On June 25 the Securities and Exchange Commissions (SEC) voted to propose a rule to treat some index annuities like securities. By a unanimous 3-0 margin, members of the commission proposed to create Rule 151A, which would affect Section 3(a) (h) of the Securities Act of 1933. Under the proposed rule, an annuity would be treated as a security if its performance were linked to a security, group of securities or a securities index and if the payout was likely to exceed the guaranteed terms of the contract. In turn, agents who sell them would have to be licensed to sell securities."



If it actually passed, it will cause quite the stir...



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PostPosted: Mon Oct 06, 2008 3:49 pm   Post subject:   

I am lost on this one...don't even know what a indexed annuity is. Someone could explain if they really wanted.

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PostPosted: Mon Oct 06, 2008 5:43 pm   Post subject:   

An Indexed Annuity is a FIXED annuity whereby the insurance company credits the interest paid on an outside "Index" such as the S & P 500.



It's a method by which one can participate in "SOME" of the gains of the market without risking one penny of principal.



See graphic below:





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PostPosted: Tue Oct 07, 2008 12:56 am   Post subject:   

Hey thanks for explaining it. I actually get it now.

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