OMG- a Company That Has Been in the Indexed Annuity Market Just Launched an IUL
September 22, 2011 by Sheryl J. Moore
Apparently there is big talk in the industry this week about an email that was distributed by a certain individual acting on behalf of a marketing organization, speculating about the competitiveness of a new indexed UL.
Here’s the deal. Yes, Ameriprise did recently launch an indexed UL. Is it any good? I’ll let you be the judge of that. As a third-party market research analyst, I do not endorse any company or financial product. I am just a big fan of indexed life and annuities. However, I do have some comments on this issue:
1. Ameriprise has never “forbidden its advisors from selling anything indexed.” I hope that everyone can be clear of this fact.
2. It is obvious from reviewing the specimen contract of this IUL that Ameriprise had outside assistance with the pricing of this product; this will likely help to ensure they meet their goals with this new IUL. Competitiveness, or a lack thereof, is relative to what one is attempting to accomplish.
3. It would be ignorant to assume that this product was benchmarked to the IULs currently being distributed through the FMO distribution. It is obvious that a company attempting to provide a solution to B/D reps need not provide product features that drive sales for FMO agents.
4. The lack of participating fixed rate loan options and comparatively reasonable illustrated rate on the Ameriprise IUL does not make their IUL product “not good” in, and of itself.
It must be unbeknownst to the author of the aforementioned email that Ameriprise has been in and out of the indexed annuity market since 1998. They last exited the market with their Index 500 Annuity on 05/01/07. So, making the transition from indexed annuities (to indexed life), when sales of IUL have been consistently increasing 35% or more over recent quarters, is not inconceivable or even surprising in my opinion.
Regarding the issue of the product being available for use in a B/D; this is no surprise either. Ever since the quashing of SEC’s Rule 151A, I have seen numerous companies show interest in both the indexed life and indexed annuity markets. As you read this, I have specimen contracts for four new carriers, that operate in the B/D distribution, pending on the indexed life side. Correspondingly, I also have specimen contracts for four new carriers, that operate in the B/D distribution, pending on the indexed annuity side.
In short, this market is expanding: new carrriers, new distributions, and ultimately new clients. The pie is growing and everyone’s slice is going to be bigger. In the end, it just means added credibility for indexed life and indexed annuities; the dwindling of negative and inaccurate media in these markets, and the ability to put the products in front of consumer’s faces: where they belong.
That’s my two cents on the “OMG” email. Happy selling. sjm