This fixed indexed annuity article is opening the door and some eyes.  However, there seems, from my perspective, much that was left on the editing room floor.

This makes my point, from the article: “But even though FIAs provide buyers with upside potential, these products are not securities, says Stan Haithcock, an adviser in Ponte Verde Beach, Fla., and the author of The Annuity Stanifesto. FIAs are an insurance product. “The unregulated sales pitch that is too often used is ‘market upside with no downside.’ Only half of that is true,” he says. “There is no downside, because it is a fixed annuity.””

Consider there is downside, I’ve seen it.  The reality is if an insurance agent makes a bad suggestion, the client can lose money.  There is risk, always.

Next, How the market index options are purchased and how the company “limits” the return is not how I understand how the products work.  While at a recent training from one of the largest producers of FIAs we learned that the minimal fixed rate interest (fixed account) is either where the contract owner allocates money or they choose the indexing method (or both).

The money that is not placed into the fixed account is not using that guaranteed money.  That guaranteed money is then used to purchase options on the index.  The way the options are purchased puts the burden to fulfill on the index credits on the option provider.  Any implied limits are not done by the carrier but by the system that provides the options & credits.

There are only 100 pennies in a dollar – how you use the pennies, now that’s where you have do your homework.  We’d support you in providing a second opinion, either for a fee or to potentially earn you business.

Read the full USA Today article – don’t believe it is all rosy there is more to learn before you purchase one of these products.