Earlier this month Jack Marrion wrote a piece for LifeHealthPro.com entitled "Wall Street Sees the Light on Indexed Annuities". this is more proof that consumers are out there looking for safe vehicles to place their money in. An excerpt from the story: “As a Merrill Lynch managing director said, “Five years ago, nobody hated the product more than me, but now I’ve seen the light.” Wall Street has discovered Indexed Annuities. Why now? Too hard to deny the fact downside protection and guarantees are here to stay.
Jack Marrion also stated in the article " The good news is it’s hard to bash something that you’re doing too, so there will be an increasing number of media stories about how good index annuities are and consumer demand will shoot up. "
I would encourage you to go Google "Indexed Annuities" and discover lots of title of articles that have slammed these products hard for a long time. With new articles turning the corner to positive side we should see wire houses and banks and other groups jumping into the marketing of these products. Good news for consumers is that more access and more education for consumers and agents.
The general benefit or value proposition for indexed annuities is this: guaranteed to never go down in value and to participate in the upside of the market (usually S&P 500 Index- could be others). How do insurance carriers provide such guarantees? They buy maybe 80% into US Treasuries and invest about 10% roughly into options for the index and use roughly 10% towards costs, marketing and other expenses. The small print on these products comes with participation limits and rules and restrictions. Some have guarantees riders to insure an increase annually in either the deposited funds or the death benefit. For the agents the variations of these often confuse and overwhelm even seasoned agents.
At the end of the day, it more about getting your objectives clearly served and not some hype of who has the highest guarantee crediting or bonus plan. Be sure to read the company materials on fees, participation rates and other disclosures as they are there to help you decide. Be careful as there are fancy presentations with big print promises that fail to deliver. These products are drawing huge sums of money and good indication that the public is less trusting in the markets and wants a safety net.