Roll Up, Roll Up and get Your High Commission Equity Indexed Annuity Here

Many Baby Boomers may be falling into the Equity Indexed Annuity Web and may well live to regret it. They are being heavily promoted to Baby Boomers and Seniors often due to the very high commissions being paid to the sellers.

It has taken some time but now it seems the problem with Index Annuities are getting the attention of the SEC. In an article on MarketWatch SEC Weighs Overhaul of ‘Index’ Annuities, it states equity indexed annuities are sold on the idea that;

“Investors benefit from gains in the stock market without any direct risk of losing money when stocks fall.

Last year, investors put $25 billion into indexed annuities. And during the bear market in stocks, it’s been an especially seductive notion.”

The SEC is getting involved because all is not what it seems with these annuities. High fees and commissions, complex ways of calculating returns, and pre-set caps to limit returns are some of the concerns.

Other concerns are related to disclosure rules that don’t measure up to ensure Baby Boomers are fully informed. Baby Boomer are becoming a prime target.

John Waggoner provides some useful incites into Equity Indexed Annuities and his article, Sometimes, equity-indexed annuities are OK, is well worth reading if you are considering them. He says,

“Equity-indexed annuities offer juicy commissions, which is one reason people like to sell them. And EIAs aren’t regulated by the National Association of Securities Dealers or the Securities and Exchange Commission. Those two reasons alone should get your feet moving. But some EIAs can be OK. Sometimes.”

The SEC web site has something to say on Equity Indexed Annuities too. You should read the information on their web site under Equity-Indexed Annuities. But note,

“Equity-indexed annuities combine features of traditional insurance products (guaranteed minimum return) and traditional securities (return linked to equity markets). Depending on the mix of features, an equity-indexed annuity may or may not be a security. The typical equity-indexed annuity is not registered with the SEC.”

Also read Equity-Indexed Annuities—A Complex Choice which uses the subtitle “Why an Alert on Equity-Indexed Annuities?” with good reason.

Scott Burns article “Equity-indexed annuities sound good, but…” tells you that you are giving your money to an insurance company for a period which is often 10 years. This makes no sense if you are in retirement because you may need that money before the period is up. That’s probably a good reason to avoid them in itself.

Baby Boomers need to look for liquid assets, avoid large losses, get regular income and minimize risk if they can. Index annuities as they are today seem to be a losing game for Baby Boomers in retirement. The only winners are the high commission sales people inviting you to a “FREE” lunch in order to sign you up. The bear market is “heaven sent” to help them convince you too.

Scott Burns also mentions an excellent report put out by Craig McCann (UCLA) and Dengpan Luo (Yale), called, “An Overview of Equity-Indexed Annuities“. As Scott says show it to the Equity Index Annuity Salesperson.

So by all means attend the seminar, have a free lunch but make sure you have studied up on equity indexed annuities from these links before you sign up.

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