We would love to hear from you. Click on the ‘Contact Us’ link to the right and choose your favorite way to reach-out!

wscdsdc

media/speaking contact

Jamie Johnson

business contact

Victoria Peterson

Contact Us

855.ask.wink

Close [x]
pattern

Industry News

Categories

  • Industry Articles (18,881)
  • Industry Conferences (5)
  • Industry Job Openings (4)
  • Moore on the Market (252)
  • Negative Media (139)
  • Positive Media (73)
  • Sheryl's Articles (704)
  • Wink's Articles (287)
  • Wink's Inside Story (261)
  • Wink's Press Releases (107)
  • Blog Archives

  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • November 2010
  • October 2010
  • September 2010
  • August 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010
  • March 2010
  • February 2010
  • January 2010
  • December 2009
  • November 2009
  • October 2009
  • August 2009
  • June 2009
  • May 2009
  • April 2009
  • March 2009
  • November 2008
  • May 2008
  • February 2008
  • August 2006
  • Response: COLUMN: Financial reform: The good, the bad, the ugly

    July 13, 2010 by Sheryl J. Moore

    PDF for Setting it Straight with Buz Livingston

     

    ORIGINAL ARTICLE CAN BE FOUND AT: COLUMN: Financial reform: The good, the bad, the ugly

    Dear Mr. Livingston,

    I am an independent market research analyst who specializes exclusively in the indexed annuity (IA) and indexed life markets. I have tracked the companies, products, marketing, and sales of these products for over a decade. I used to provide similar services for fixed and variable products, but I believe so strongly in the value proposition of indexed products that I started my own company focusing on IAs exclusively. I do not endorse any company or financial product, and millions look to us for accurate, unbiased information on the insurance market. In fact, we are the firm that regulators look to, and work with, when needing assistance with these products.

    I am contacting you, as the author of an article that was published in The Walton Sun, “Financial reform: The good, the bad, the ugly.” This article had several inaccurate and misleading statements about annuities in it. I know that there were not made intentionally. I am contacting you in response to these inaccuracies to ensure that you and your readers have accurate, unbiased information on these products in the future.

    First of all, indexed annuities have not been referred to as “equity indexed annuities” since the late 1990’s. The insurance industry has been careful to enforce a standard of referring to the products as merely “indexed annuities” or “fixed indexed annuities,” so as not to confuse consumers. This industry wants to make a clear distinction between these fixed insurance products and equity investments. It is the safety and guarantees of these products which appeal to consumers, particularly during times of market downturns and volatility. Your help in avoiding any such confusion is so greatly appreciated.

    Second, indexed annuities should not be registered as securities. The SEC previously defined insurance products in Safe Harbor Rule 151 as:

    1. A product that is regulated by a state insurance commissioner/division.
    2. A product where the risk is borne to the insurance company, not the purchaser.
    3. A product that is not marketed primarily as an investment.

    Indexed annuities meet this definition and have since their introduction in February of 1995.

    Third, your description of indexed annuities is disingenuous. An indexed annuity is a contract issued by an insurance company that has a minimum guarantee where crediting of any excess interest is determined by the performance of an external index, such as the Standard and Poor’s 500® index. The client is never directly invested in the index or the market with indexed annuities, but interest is merely based on the performance of an external index.

    Fourth, the average surrender charge on indexed annuities as of 1Q2010 is 10.61%. This is a far cry from the 15% that you throw out.

    Fifth, I’d be interested to see the data that supports your statement that “nothing, nada is more abused than equity-indexed annuities.” Quite honestly, it sounds like you are spouting-off about something you are little educated on. In reality, the data does not support your statement. See data below from the National Association of Insurance Commissioner’s Closed Complaint Database on annuities:

    TOTAL INDEXED ANNUITY COMPLAINTS FOR 2006: 187

    TOTAL INDEXED ANNUITY COMPLAINTS FOR 2007: 235

    TOTAL INDEXED ANNUITY COMPLAINTS FOR 2008: 220

    TOTAL INDEXED ANNUITY COMPLAINTS FOR 2009: 148

    Based on our research, this results in average annual complaints as follows:

    AVERAGE INDEXED ANNUITY COMPLAINTS PER COMPANY 2006: 4.35

    AVERAGE INDEXED ANNUITY COMPLAINTS PER COMPANY 2007: 4.12

    AVERAGE INDEXED ANNUITY COMPLAINTS PER COMPANY 2008: 3.86

    AVERAGE INDEXED ANNUITY COMPLAINTS PER COMPANY 2009: 3.29

    So, not only have complaints on these indexed annuities declined annually for the past three years, but the average has declined consistently for the past four years. Conversely, variable annuity complaints (which are overseen by the SEC) have always been greater than the number of indexed annuity complaints, and have risen in recent years. Certainly, we do strive for 100% customer satisfaction in the insurance market, but I would contend that an average of only 3.29 complaints annually, per company, is quite reasonable and not indicative of “abusive” sales practices.

    Sixth, the Securities and Exchange Commission (SEC) deemed that “registration was appropriate” because they needed to increase their fees and job security. Let’s remember that the SEC (who is responsible for the regulation of investments) had their hands very full with the products that they are already regulating at the time that they first proposed regulating indexed annuities. Specifically, the SEC is the organization that let Bernard Madoff swindle $50 billion from American’s retirement nest eggs. Clear warning signs of Madoff’s fraud began to emerge as much as a decade before he was caught, and yet SEC did nothing. This is the same organization that you would suggest regulate indexed insurance products? I think you need to rethink their inclinations, Mr. Livingston. I believe it would be prudent for the SEC and FINRA get their own houses in order before they decide to put more regulation on their plates.

    Seventh, I’ve got a newsflash for you. Insurance company VPs generally do not oversee the compliance and market conduct of the products that they sell. These are the people you need to talk to, if you want the facts on any suspicions you may have about these products. Fortunately, the data I have provided you on the low complaint levels should waken you to the fact that indexed annuities are not what you perceive them to be.

    The insurance industry has done a very good job of imposing strict regulations to ensure proper market conduct, suitability, product development, and sales practices in this industry. The currently regulatory structure that indexed annuities operate under is very thorough and effective. The insurance commissioners regulate indexed annuities with rigorous standard non-forfeiture laws, advertising guidelines, suitability regulations, and other rules. The states hold the authority to take sanctions against insurance agents including, but not limited to, license revocation, penalties and fines. An interesting comparison of state and federal regulation exists relative to annuity complaints specifically. If I need to make a complaint on an indexed annuity, the state insurance division has to respond to me within ten days; and I incur no cost in my efforts to resolve the problem. Compare this with the exhaustive complaint process on the securities side; delays, lawyers, and a lot of my money spent. Yes, SEC regulation  is different, but it most definitely is not better than insurance regulation.

    You fail to realize that indexed annuities are a valuable retirement tool for Americans. They offer many benefits (including, but not limited to):

    1.  No indexed annuity purchaser has lost a single dollar as a result of the market’s declines. Can you say the same for variable annuities? Stocks? Bonds? Mutual funds? NO.
    2. All indexed annuities return the premiums paid plus interest at the end of the annuity.
    3. Ability to defer taxes: you are not taxed on annuity, until you start withdrawing income.
    4. Reduce tax burden: accumulate your retirement funds now at a [35%] tax bracket, and take income at retirement within a [15%] tax bracket.
    5. Accumulate retirement income: annuities allow you to accumulate additional interest, above the premium you pay in. Plus, you accumulate interest on your interest, and interest on the money you would have paid in taxes. (Frequently referred to as “triple compounding.”)
    6. Provide a death benefit to heirs: all fixed and indexed annuities pay the full account value to your beneficiaries upon death.
    7. Access money when you need it: fixed annuities allow annual penalty-free withdrawals of the account value, typically at 10% of the annuity’s value (although some indexed annuities permit as much as 20% of the value to be taken without penalty). In addition, 9 out of 10 fixed and indexed annuities permit access to the annuity’s value without penalty, in the event of triggers such as nursing home confinement, terminal illness, disability, and even unemployment.
    8. Get a boost on your retirement: many fixed and indexed annuities provide an up-front premium bonus, which can provide an instant boost on your annuity’s value. This can increase the annuity’s value in addition to helping with the accumulation on the contract.
    9. Guaranteed lifetime income: an annuity is the ONLY product that can guarantee income that one cannot outlive.

    I would suggest that in the future you do much more fact-checking on your articles before you decide to distribute them publicly. In order to ensure your journalistic integrity, I am happy to serve as a resource for you in the future, should you ever have a need for factual information on indexed insurance products. In the interim, I would suggest a correction to this piece.

    Thank you.

    Sheryl J. Moore

    President and CEO

    AnnuitySpecs.com

    LifeSpecs.com

    IndexedAnnuityNerd.com

    Advantage Group Associates, Inc.

    (515) 262-2623 office

    (515) 313-5799 cell

    (515) 266-4689 fax

    Originally Posted on July 13, 2010 by Sheryl J. Moore.

    Categories: Negative Media
    currency