Universal Life Insurance

What Are Indexed Annuities Pros And Cons?

2011-04-18T22:12:00.001-07:00

What Is An Indexed Annuity?

What are Indexed Annuities?

According to The National Association of Insurance Commissioners Buyer’s Guide, “An indexed annuity is a fixed annuity, either immediate or deferred, that earns interest or provides benefits that are linked to an external equity reference or an equity index.

http://www.youtube.com/watch?v=N8ogPYDA9Do

Mini Masseuse Pro Series

2010-10-29T04:32:00.001-07:00

Mini Masseuse - Mini Masseuse Pro

Mini Masseuse - FAQ's
Mini Masseuse Frequently Asked Questions- FAQ's

How does Mini Masseuse work? Live Help: 800-286-1812

Mini Masseuse uses bioelectric stimulus to massage your muscles. This actually causes the muscles to exercise and increases circulation in the area of the massage. This can really help to reduce tension and knots. It can also reduce inflammation. Consequently, Mini Masseuse can help your muscles and joints feel better.

Where can I use the Mini Masseuse massage pads?

You can use the Mini Masseuse massage pads on almost every muscle and joint area on your body. Do not apply the massage pads near the heart, on the head, above the neck, in the pubic region, over scarred areas, on the throat or in the mouth. As a general rule of thumb if you have a muscle or joint that is hurting, put the pads on or around the area always making sure both pads are on muscles.

How far up on the back of my neck can I put the massage pads?

About half-way up the neck. If you have tension at the base of your head, placing the pads halfway up should help that area.

I put the massage pads on my shoulders, but the massage sensation feels uncomfortable. What should I do?

You probably have a lot of tension in that area. Often people don't realize that they have tension until they get a massage. If the uncomfortable feeling persists for more than a minute or two, move the massage pads over or down a little. Sometimes, an indirect massage is necessary for your really sensitive areas.

Is Mini Masseuse safe to use?

Bio-electric stimulus is perfectly safe to use and is therapeutic for most people. However, people with certain health conditions cannot use this massager. Pregnant women must avoid using this massager. Patients who use a pacemaker or life support equipment, such as an artificial heart-lung device(s) and/or respirator type medical devices must avoid using this massager. Consult with your doctor before using Mini Masseuse if you have or think you have:

Skin problems

Acute disease

Malignant tumor(s)

Infectious disease

Epilepsy

Recent surgery

Cardiac dysfunction

High blood pressure

High fever

Do not open the chassis/body control shell for any reason. Also make sure to keep Mini Masseuse and the massage pads out of reach of children.

How long do the massage pads last?

With frequent usage, the two pair of pads included in the massager package should last about 4-6 months. Always make sure to apply a few drops of water on the pads before and after usage. Cover the pads with their protective films after usage and put them back in their zip lock bags so they don't dry out.

No matter where I put the massage pads I feel an uncomfortable stinging sensation. What should I do?

The massage pads may be worn out and need replacement. If they look good and have good adhesiveness, your battery may be getting low. More massage pads can be ordered here.

How long will a 9 volt battery last in the massager?

Generally about 20 hours of runtime or more. This kind of technology is not hard on batteries.

Does Mini Masseuse have a warranty?

Yes, Mini Masseuse has a two year warranty. Check our warranty page for further details.

What is MiniMasseuseProSeries.net's return policy?

MiniMasseuseProSeries.net offers a two year exchange policy on defective merchandise. If for any reason your unit malfunctions within two years of purchase you may return it to us for examination as per our warranty program. Mini Masseuse.com does not offer refunds on purchased merchandise.

Mini Masseuse Normal Price $193.95 Your Price $119.95

MiniMasseuseProSeries.netTechnorati Tags: mini masseuse, mini masseuse pro series

Mini Masseuse Pro Series EMS Unit

2010-10-27T07:13:00.001-07:00

Mini Masseuse Pro Series - Mini Masseuse Pro

Mini Masseuse Pro Series - Mini Masseuse Pro
Mini Masseuse Pro Series

All new Mini Masseuse Pro Series. Features seven massage
sensations and three options. Your unit can use a USB
Adapter(included) for direct at your desk or laptop power.
AC Adapter (included) or three AAA batteries (included).
No other massager can compare in quality,
relief sensations or price. Listed and registered by
the FDA. BUY NOW
Mini Masseuse Pro Electronic Muscle Stimulator FAQ's Contact Us Privacy

Mini Masseuse Pro
Electronic Muscle Stimulator
FAQ's
Mini Masseuse News
Contact Us
Terms
Privacy
Site Map

Mini Masseuse Pro Series

Mini Masseuse Pro Series

Mini Masseuse Pro Series

Mini Masseuse Pro Series

Mini Masseuse Pro Dual Adapter

Mini Masseuse Pads

Mini Masseuse Pad Wires

Mini Masseuse Pro Series

Mini Masseuse Pro Series

Mini Masseuse Pro Series

Mini Masseuse Pro Series

Mini Masseuse Pro Series

Mini Masseuse Pro Series $74.95 Off Normal Price, Here Only!

Video Demonstration Below ==> Live Help: 800-286-1812

Mini Masseuse Pro Series
Regular Price $193.95 Your Price $119.95 Today. Your Total Savings: $74
Mini Masseuse Pro Series

Each Unit with extras, normal price $193.95
Your Total Savings ---------->> - $ 74.95
$119.95
FREE With Initial Order, Here only.
FREE Pad Wires. Value $ 7.95
FREE Massage Pads. Value $15.00
FREE AC/USB Adapter Value $19.95

Mini Masseuse Pad Wires
Mini Masseuse Pro Series

Mini Masseuse Pro Pads
Dual Adapter (Converts To 4 Pads) $29.95 Add To Shopping Cart.

Mini Masseuse Dual Adapter
Mini Masseuse Pro Series

Mini Masseuse Pro Series

Mini Masseuse Pro Series Is New And Improved From www.minimasseuse.com

Mini Masseuse Pro Electronic Muscle Stimulator FAQ's Mini Masseuse
Technorati Tags: mini masseuse pro series, mini masseuse pro, mini masseuse

MiniMasseuseProSeries.org

Gold: What Is The Economy Usually Doing When It Goes Up?

2010-09-23T06:53:00.001-07:00

Gold: What Is The Economy Usually Doing When It Goes Up?

Gold: What Is The Economy Usually Doing When It Goes Up?
Research proves wrong the idea that gold reliably rises during recessions, says EWI President Robert Prechter.
September 21, 2010
By Elliott Wave International

...If gold isn’t going up when the economy is contracting, when is it going up? Table 4 (see chart on p. 24 of this free Club EWI report -- Ed.) answers the question: All the huge gains in gold have come while the economy was expanding. This is true of the three most dramatic gold gains of the past century:

(1) Congress changed the official price of gold from $20.67 to $35 per ounce in 1934, during an economic expansion. The gain against the dollar was 69 percent.
(2) The entire bull market from 1970 to 1980 occurred during an economic expansion... [Of] the $815 per ounce that gold rose from 1970 to 1980, $725 worth of it came while the economy was expanding.
(3) The entire bull market from 2001 to the present occurred during an economic expansion... [Of] the $748 per ounce that gold has risen since February 2001, $726 worth of it has come while the economy was expanding.

Even lesser rises in gold, such as the two big rallies during the 1980s, came during economic expansions. So the biggest gains in gold, by far, have occurred while the economy was in expansion, not contraction.

Why is such the case? Simple: During expansions, liquidity is available, and it has to go somewhere. Sometimes it goes into stocks, sometimes it goes into gold, and sometimes it goes into both. During times of extreme credit inflation, such as we have experienced over the past three decades, the moves in these markets during economic expansions are likewise extreme. When recession hits, liquidity dries up, and investors stop buying. During depressions, they sell assets with a vengeance.

Of course, we socionomists do not believe in the external causality of investment price movements. Recessions and expansions do not make investment prices move up and down. Fluctuations in social mood propel the economy, liquidity and movements in investment prices. So the only reason we bother with studies like this is to de-bunk various commonly held views of financial causality. Now we know: The idea that gold reliably rises during recessions and depressions is wrong; in fact, like most such passionately accepted lore, it’s backwards.
Finish reading this 16-chapter paper online now, free! Download Robert Prechter's FREE 40-Page Gold and Silver eBook.

Here's what else you'll learn:

* Why Gold Is Still Money
* What Long Term Analysis of Gold Stocks Shows
* Study: Does Gold Always Go Up in Recessions and Depressions?
* True or False: Gold Is Better Than Stocks During Expansions
* What’s Next for Gold?
* Elliott Waves in the Silver Market
* MORE

Keep reading this free report now -- Download Robert Prechter's FREE 40-Page Gold and Silver eBook.

This article was syndicated by Elliott Wave International and was originally published under the headline Gold: What Is The Economy Usually Doing When It Goes Up?. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
Annuity Definition

What Are Indexed Annuities?

Technorati Tags: gold, economy, elliott wave, robert prechter, indexed annuities, fixed annuity

Indexed Annuities

How to Forecast Markets Using Technical Analysis

2010-09-17T08:54:00.001-07:00

How to Forecast Markets Using Technical Analysis

Your Free Chance to Learn How to Forecast Markets Using Technical Analysis
EWI's Senior Tutorial Instructor Jeffrey Kennedy gives you practical lessons -- free
September 17, 2010
By Elliott Wave International

There are two camps of market analysts out there: the fundamental camp and the technical one. Fundamental analysts look at things like the GDP, unemployment, interest rates, etc. to make logical assumptions about where the stock market is going.

Technical analysts use none of that. They look at the market's internals to gauge the trend: things like momentum, trend channels -- and yes, Elliott wave patterns.

And this is your free chance to learn how they do it.

We've put together a free 54-page Club EWI resource for you, "The Ultimate Technical Analysis Handbook." Below is a short excerpt from chapter 3. Enjoy! (For details on how to read this free report in full, look below.)

The Ultimate Technical Analysis Handbook
Chapter 3: How To Integrate Technical Indicators Into an Elliott Wave Forecast
By EWI's Senior Tutorial Instructor Jeffrey Kennedy

I love a good love-hate relationship, and that’s what I’ve got with technical indicators. Technical indicators are those fancy computerized studies that you frequently see at the bottom of price charts that are supposed to tell you what the market is going to do next (as if they really could). The most common studies include MACD, Stochastics, RSI and ADX, just to name a few.

I often hate technical studies because they divert my attention from what’s most important -- PRICE. ... Nevertheless, I have found a way to live with them, and I do use them. Here’s how: Rather than using technical indicators as a means to gauge momentum or pick tops and bottoms, I use them to identify potential trade setups.

Out of the hundreds of technical indicators I have worked with over the years, my favorite study is MACD (an acronym for Moving Average Convergence-Divergence). ... Even though the standard settings for MACD are 12/26/9, I like to use 12/25/9 (it’s just me being different). An example of MACD is shown in Figure 6 (Coffee).

Coffee - December Contract Daily Data

The simplest trading rule for MACD is to buy when the Signal line (the thin line) crosses above the MACD line (the thick line), and sell when the Signal line crosses below the MACD line. Although many people use MACD this way, I choose not to... I like to focus on different information that I’ve observed and named: Hooks, Slingshots and Zero-Line Reversals. Once I explain these, you’ll understand why I’ve learned to love technical indicators. ...

Read the rest of the 50-page "Ultimate Technical Analysis Handbook" online now, free! All you need is to create a free Club EWI profile. Here's what else you'll learn:

Chapter 1: How the Wave Principle Can Improve Your Trading
Chapter 2: How To Confirm You Have the Right Wave Count
Chapter 3: How To Integrate Technical Indicators Into an Elliott Wave Forecast
Chapter 4: Origins and Applications of the Fibonacci Sequence
Chapter 5: How To Apply Fibonacci Math to Real-World Trading
Chapter 6: How To Draw and Use Trendlines
Chapter 7: Time Divergence: An Old Method Revisited
Chapter 8: Head and Shoulders: An Old-School Approach
Chapter 9: Pick Your Poison... And Your Protective Stops: Four Kinds of Protective Stops
Get more lessons like the one above in the free 50-page Ultimate Technical Analysis Handbook. Learn more and download your free copy here

This article was syndicated by Elliott Wave International and was originally published under the headline Your Free Chance to Learn How to Forecast Markets Using Technical Analysis. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
Annuity Definition

Indexed Annuities

Now is Not the Time to Speculate in Stocks

2010-08-31T13:38:00.001-07:00

3 Reasons Now is Not the Time to Speculate in Stocks - Fixed Annuity Definition, Fixed Indexed Annuities, Lifetime Income Annuity

3 Reasons Now is Not the Time to Speculate in Stocks
Sometimes the investment weather forces you to 'buy a coat,' says Robert Prechter
August 31, 2010
By Elliott Wave International

When it's sunny, you head outside without a thought, but when it's rainy, you look for your umbrella.

When the markets are trending up, you don't worry about your investments much, but when the markets turn bearish ... what do you do?

In an interview with Jeff Sommer of The New York Times in July 2010, Robert Prechter said that he is convinced that a "market decline of staggering proportions" is on its way, and that individual investors should get out of the market and into cash and cash equivalents, such as Treasury bills.

"I'm saying: 'Winter is coming. Buy a coat,'" Prechter said. "Other people are advising people to stay naked. If I'm wrong, you're not hurt. If they're wrong, you're dead. It's pretty benign advice to opt for safety for a while."

Read some of the latest nuggets directly from Elliott Wave International President Robert Prechter's desk -- FREE. Click here to download a free report packed with recent analysis and forecasts from Prechter's Elliott Wave Theorist.

For more specific advice as to why now is not the right time to speculate in stocks, here's an excerpt from chapter 20 of Prechter's business best-selling book, Conquer the Crash -- You Can Survive and Prosper in a Deflationary Depression, 2nd edition 2009.

* * * * *

Should You Speculate in Stocks?

Perhaps the number one precaution to take at the start of a deflationary crash is to make sure that your investment capital is not invested “long” in stocks, stock mutual funds, stock index futures, stock options or any other equity-based investment or speculation. That advice alone should be worth the time you spent to read this book.

1. Stocks May Go to Near Zero

In 2000 and 2001, countless Internet stocks fell from $50 or $100 a share to near zero in a matter of months. In 2001, Enron went from $85 to pennies a share in less than a year. These are the early casualties of debt, leverage and incautious speculation. Countless investors, including the managers of insurance companies, pension funds and mutual funds, express great confidence that their “diverse holdings” will keep major portfolio risk at bay. Aside from piles of questionable debt, what are those diverse holdings? Stocks, stocks and more stocks. Despite current optimism that the bull market is back, there will be many more casualties to come when stock prices turn back down again.

2. Stock Mutual Funds Will Fall, Too

Not only will many stocks fall 90 to 100 percent, but so will a substantial number of stock mutual funds, which cannot exit large equity positions without depressing prices and which have the added burden to you of one percent (or more) annual management fees. The good news is that we will finally find out who the few truly good fund managers are and which ones were heroes by virtue of being around for a bull market.

3. The Fed Won't Be Able To Save the Stock Market

Don’t presume that the Fed will rescue the stock market, either. In theory, the Fed could declare a support price for certain stocks, but which ones? And how much money would it commit to buying them? If the Fed were actually to buy equities or stock-index futures, the temporary result might be a brief rally, but the ultimate result would be a collapse in the value of the Fed’s own assets when the market turned back down, making the Fed look foolish and compromising its primary goals, as cited in Chapter 13. It wouldn’t want to keep repeating that experience. The bankers’ pools of 1929 gave up on this strategy, and so will the Fed if it tries it.

Read some of the latest nuggets directly from Elliott Wave International President Robert Prechter's desk -- FREE. Click here to download a free report packed with recent analysis and forecasts from Prechter's Elliott Wave Theorist.

This article was syndicated by Elliott Wave International and was originally published under the headline 3 Reasons Now is Not the Time to Speculate in Stocks. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Annuity Definition

Technorati Tags: elliott wave, robert prechter, stock market crash,

The Hindenburg Omen -- Omen-ous or Not? Robert Prechter

2010-08-25T11:09:00.001-07:00

The Hindenburg Omen -- Omen-ous or Not?

Hindenburg Omen -- Omen-ous or Not?
Elliott Wave International Chief Market Analyst Steve Hochberg Sheds Light on a Feared Technical Indicator
August 24, 2010

By Elliott Wave International

On Aug. 12, volatile market action coincided with a technical signal called the Hindenburg Omen, whereby a relatively high number of new highs and lows in individual stocks occur at the same time.

This indicator instantly gained an enormous amount of media attention. So we sat down with Steve Hochberg, EWI's chief market analyst and close colleague of Robert Prechter, to ask him about the now-infamous Hindenburg Omen.

EWI: Steve, recently a market indicator called the Hindenburg Omen has been in the news, what is going on?

Steve Hochberg: Discussion of this indicator certainly has been everywhere. Someone emailed us and said they even saw it mentioned on the front page of the Drudge Report! Look, headline-grabbing names grab headlines. Essentially it measures the fractured nature of market action. Over the years, we've discussed numerous times in our publications how a fractured market is oftentimes an unhealthy market. The multiple non-confirmations registered at the recent August 9 stock high, which we talked about in the Short Term Update, are another manifestation of this bearish behavior. The message is consistent with how we view the Elliott wave structure.

EWI: Why are people interested in this particular indicator?

SH: That's a good question, and it speaks to a broader issue, viz., the "re-emergence" of technical analysis into the mainstream consciousness of market participants. In Prechter's Perspective, Robert Prechter discusses the timing of the popularity of technical analysis, of which Elliott waves, or pattern recognition, is the highest form:

"In long term bull markets, no one really needs market timing because the market is always going up. This was true during the 1950s and 1960s, a period of market strength. And it has been mostly true since 1982. From 1966 to 1982, though, the market was very cyclic, so investors couldn't sleep like babies with a buy-and-hold blanket like they do today."

The S&P 500 has a negative return over at least the past 12 years, so investors are naturally questioning the "broadly diversified, buy and hold" stance advocated by 90%+ of investment advisors. EWI subscribers are way ahead of the mass of investors because as the bear market progresses, the media should show increased focus on technical analysis, including patterns such as head-and-shoulders as well as trendlines, moving averages and, yes, even Elliott waves, just as they did during the last great bear market from 1966 to 1982. It will be an exciting time for those with even a cursory knowledge of the technicals.

EWI: So, what are you seeing now?

SH: Obviously we cannot give away our analysis, but the wave structure is clear, the myriad indicators we keep offer compelling confirmation and the market is accommodating our forecast. If readers have any interest in what this means for not only the stock market, but also all other markets, please give us a read to see if our work might be useful in helping to formulate your investment portfolio. We think it will be a worthwhile endeavor.

Read some of the latest nuggets directly from Elliott Wave International President Robert Prechter's desk -- FREE. Click here to download a free report packed with recent analysis and forecasts from Prechter's Elliott Wave Theorist.

This article was syndicated by Elliott Wave International and was originally published under the headline The Hindenburg Omen -- Omen-ous or Not?. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

AnnuityDefinition.com

Happyretiree.com

Life Annuities Provide Life Annuity Income, But How To Find The Best Rate?

2010-08-21T11:18:00.001-07:00

Life Annuities - Life Annuity, Lifetime Annuities, Annuities For Life - Fixed Annuity Definition, Fixed Indexed Annuities, Lifetime Income Annuity

Life annuities:

Straight life annuity:

This option provides payments for the rest of your life, even if the payments exceed the money you put into the annuity. While this option usually pays out the most, if you die before all of the money you put in has been distributed, no additional payments will be made to your dependents.

Joint and survivor life annuities:

This life annuity provides payments to you as long as you live and to a designated beneficiary as long as he or she lives. Life income with refund annuity. With this product, payouts continue for life, but if you die before collecting all the premiums you have paid, your beneficiary collects the remaining money.

Life annuity with period certain:

This annuity offers income for life. If you die before receiving the total of premiums paid, your beneficiary receives payments for the remainder of the period.

Annuity Definition

Technorati Tags: life annuities, lifetime annuity, annuities, income annuities

Indexed Annuities

Annuity, Annuities

Fidelity 401k Hardship Withdrawals up 20% in Second Quarter.

2010-08-20T14:36:00.001-07:00

401k Withdrawal, 401(k) Withdrawals From Your 401k

Many 401(k) plans allow employees to make a hardship withdrawal because of immediate and heavy financial needs. Generally, hardship withdrawal distributions from a 401(k) plan are limited to the amount of the employees' elective contributions only, and do not include any income earned on the deferred amounts. Hardship 401k withdrawal distributions are not treated as eligible rollover withdrawal distributions.

401 k withdrawal distributions received before age 59 1/2 are subject to an early distribution penalty of 10% additional tax unless an exception applies. For more information about the treatment of retirement plan distributions, refer to Publication 575, Pension and Annuity Income.

Elliott Wave - Efficient Market Hypothesis: R.I.P.

2010-08-19T16:50:00.001-07:00

Efficient Market Hypothesis: R.I.P. - Fixed Annuity Definition, Fixed Indexed Annuities, Lifetime Income Annuity

Efficient Market Hypothesis: R.I.P.

August 19, 2010
By Elliott Wave International

Of all the belief systems of Wall Street, few can claim the devoted following of the Efficient Market Hypothesis, the idea that stock prices adhere to the same laws of supply-and-demand that govern retail products. Once coined the theoretical "Parthenon" of economics, this notion has consistently endured the test of time ----- until now. Academics and advisors across the globe are currently exposing crack after crack in the "Efficient" model so deep as to bring the entire theory crashing to the ground.

"The EMH is not only dead," writes a July 29, 2010 news source. "It's really, most sincerely dead." (Minyanville)

As to what caused the theory's collapse -- one recent business journal offers this insight:

"Financial markets do not operate the same way as those for other goods and services. When the price of a television set or software package goes up, demand for it generally falls. When the prices of a financial asset rises, demand generally rises." (The Economist)

Here's the thing. SIX years ago, Elliott Wave International president Bob Prechter pronounced the exact same finding in his April 2004 Elliott Wave Theorist. (Read that full-length publication today, absolutely free by clicking on the hyperlink) In that groundbreaking report, Bob presented the compelling picture below that shows how investors increase their percentage of stock holdings as prices rise, and decrease them as prices fall:

The next question is why? Answer: Motivation: i.e. the purchase of goods and services is about need; while the purchase of stocks is about desire. Here, Bob Prechter's 2004 Theorist takes the rein:

"The fact is that everyday in finance, investors are uncertain. So they look to the herd for guidance. Because herds are ruled by the majority -- financial market trends are based on little more than the shared mood of investors -- how they feel -- which is the province of the emotional areas of the brain (limbic system), not the rational ones (neocortex)... Buyers, in a rising market appear unconsciously to think, 'The herd must know where the food is. Run with the herd and you will prosper.' Sellers in a falling market appear to unconsciously think, 'The herd must know that there's a lion racing toward us. Run with the herd or you will die.'"

Prechter and contributor Wayne Parker then expanded on his landmark observation in the 2007 Journal of Behavioral Finance. (Also available, absolutely free by clicking on the hyperlink)

In the end, it's not enough to just tear down the long-standing EMH. One must build another, more accurate model up in its place. And in the 2004 Theorist, Bob Prechter does just that with the Wave Principle, which reconciles the technical and psychological sides of stock market behavior into this key point: Herding impulses, while not rational, are also NOT random. They unfold in clear and calculable wave patterns as reflected in the price action of financial markets.

As the mainstream media continues to jump on board Prechter's Financial/Economic Dichotomy Theory, you can read both of Prechter's original writings. Enjoy your complimentary access to the 2004 April 2004 Elliott Wave Theorist and the 2007 Journal of Behavioral Finance.

Read some of the latest nuggets directly from Robert Prechter's desk -- FREE. Click here to download a free report packed with recent quotes from Prechter's Elliott Wave Theorist.

This article was syndicated by Elliott Wave International and was originally published under the headline Efficient Market Hypothesis: R.I.P.. EWI is the world's largest market forecasting firm. Its staff of full-time analysts lead by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Annuity Definition

Slicing the Neckline: A Classic Technical Pattern Agrees with the Elliott Wave Count

2010-08-18T17:32:00.001-07:00

Slicing the Neckline: A Classic Technical Pattern Agrees with the Elliott Wave Count - Fixed Annuity Definition, Fixed Indexed Annuities, Lifetime Income Annuity

Slicing the Neckline: A Classic Technical Pattern Agrees with the Elliott Wave Count

August 17, 2010
By Elliott Wave International

In the August issue of his Elliott Wave Theorist, market forecaster Robert Prechter alerted readers that the U.S. stock market was slicing the neckline of a classic head-and-shoulders pattern in technical analysis, and that this may send the market into critical condition.

Prechter said that when the Elliott wave count and a head-and-shoulders pattern are saying the same thing about the stock market, it's best to pay attention.

Read some of the latest nuggets directly from Robert Prechter's desk -- FREE. Click here to download a free report packed with recent quotes directly from Prechter's Elliott Wave Theorist.

Here's how the August issue of the Elliott Wave Financial Forecast, the sister publication to Prechter's Theorist, described the head and shoulders pattern unfolding in the stock market:

"The weekly Dow chart [below] shows the development of an intermediate-term, head-and-shoulders pattern from the January high at 10,729.90 to the present. The January high marks the left shoulder, the April 26 high at 11,258 is the head, and the right shoulder is now ending. The April [Theorist] discussed the pertinent characteristics that Edwards and Magee used to define this technical pattern ... all apply to the current formation. Observe how weekly stock trading volume has contracted during the development of the right shoulder, a necessary trait of this pattern. The downward-sloping neckline -- exactly as on the big ten year pattern -- displays market weakness, which is consistent with our interpretation of the wave structure."

This chart shows the head-and-shoulders pattern.

Total U.S. Stock Market Volume

Here's what Robert Prechter himself said in a recent Elliott Wave Theorist:

"Generally, when the neckline slopes downward, the right shoulder does not rise to the level of the left shoulder ..."

Please look at the chart again -- then re-read Prechter's quote.

Read some of the latest nuggets directly from Robert Prechter's desk -- FREE. Click here to download a free report packed with recent quotes from Prechter's Elliott Wave Theorist.

This article was syndicated by Elliott Wave International and was originally published under the headline Slicing the Neckline: When the Market May Go into "Critical Condition". EWI is the world's largest market forecasting firm. Its staff of full-time analysts lead by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Annuity Definition

Deflation: First Step, Understand It

2010-08-17T12:31:00.001-07:00

Deflation: First Step, Understand It
There is still time to prepare if deflation is indeed in our future.
August 16, 2010

By Elliott Wave International

"Fed's Bullard Raises Specter of Japanese-Style Deflation," read a July 29 Washington Post headline.

When the St. Louis Fed Chief speaks, people listen. Now that deflation -- something that EWI's president Robert Prechter has been warning about for several years -- is making mainstream news headlines, is it too late to prepare?

It's not too late.

There are still steps you can take if deflation is indeed in our future. The first step is to understand what it is. So we've put together a special, free, 60-page Club EWI resource, "The Guide to Understanding Deflation: Robert Prechter’s most important warnings about deflation." Enjoy this quick excerpt. (For details on how to read this important report free, look below.)

When Does Deflation Occur?
By Robert Prechter

To understand inflation and deflation, we have to understand the terms money and credit.

Money is a socially accepted medium of exchange, value storage and final payment; credit may be summarized as a right to access money. In today’s economy, most credit is lent, so people often use the terms "credit" and "debt" interchangeably, as money lent by one entity is simultaneously money borrowed by another.

Deflation requires a precondition: a major societal buildup in the extension of credit (and its flip side, the assumption of debt). Austrian economists Ludwig von Mises and Friedrich Hayek warned of the consequences of credit expansion, as have a handful of other economists, who today are mostly ignored. Bank credit and Elliott wave expert Hamilton Bolton, in a 1957 letter, summarized his observations this way:

In reading a history of major depressions in the U.S. from 1830 on, I was impressed with the following:
(a) All were set off by a deflation of excess credit. This was the one factor in common.
(b) Sometimes the excess-of-credit situation seemed to last years before the bubble broke.
(c) Some outside event, such as a major failure, brought the thing to a head, but the signs were visible many months, and in some cases years, in advance.
(d) None was ever quite like the last, so that the public was always fooled thereby.
(e) Some panics occurred under great government surpluses of revenue (1837, for instance) and some under great government deficits.

Near the end of a major expansion, few creditors expect default, which is why they lend freely to weak borrowers. Few borrowers expect their fortunes to change, which is why they borrow freely. The psychological aspect of deflation and depression cannot be overstated. ...

Read the rest of this important 60-page Robert Prechter's report online now, free! Here's what else you'll learn:

What Makes Deflation Likely Today?
How Big a Deflation?
Why Falling Interest Rates in This Environment Will Be Bearish
Myth: "Deflation Will Cause a Run on the Dollar, Which Will Make Prices Rise"
Myth: "Debt Is Not as High as It Seems"
Myth: "War Will Bail Out the Economy"
Myth: "The Fed Will Stop Deflation"

This article was syndicated by Elliott Wave International and was originally published under the headline Deflation: First Step, Understand It. EWI is the world's largest market forecasting firm. Its staff of full-time analysts lead by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Annuity Definition

7 Ways to Become an Unsuccessful Trader

2010-08-12T11:18:00.001-07:00

7 Ways to Become an Unsuccessful Trader

Q&A with an experienced Elliott wave trader reveals seven common trading mistakes.
August 12, 2010

By Elliott Wave International

To be a successful trader demands knowledge.

If you'd prefer to become an unsuccessful trader, you can start by making the following common trading mistakes, detailed by a professional who spent 25 years in portfolio management, trading and forecasting in the financial capital of the world, New York City.

In 2002, Wayne Gorman, long-time Elliott wave trader and current head of trader education at Elliott Wave International, left his 35th floor Manhattan apartment and moved to the quiet of North Georgia. He's been sharing his knowledge and skills with aspiring traders ever since -- in both online seminars and before live audiences around the world.

Wayne graciously agreed to a Q&A about trading mistakes. In his interview, Wayne reveals seven common mistakes traders make.

--------

EWI: Could you name two mistakes frequently made by stock traders?

Wayne Gorman: (mistake 1) The first big mistake is the flawed logic of extrapolation. Many traders and investors assume that a trend will remain in force until an "event" comes along to change it. But market trends are not like billiard balls on a pool table. This false assumption will put you on the wrong side of the market more times than not, especially at major turning points.

(mistake 2) The second big mistake is to suppose that news events drive market trends. In fact, the opposite is true: economic, political and social events lag market trends.

EWI: What are two common mistakes among options traders?

WG: (mistake 3) One common mistake is to buy puts or calls that are way "out of the money," with no other transactions to compliment them. Unless your timing is absolutely perfect -- and who has perfect timing? -- your chance of success is low. It’s like buying a lottery ticket.

(mistake 4) Another common mistake is to buy options with too little time left to expiration. With less than one month to expiration, the time decay begins to accelerate and the chances of success diminish.

EWI: Please name a frequent mistake among traders who aim to catch the beginning of a particular Elliott wave.

WG: (mistake 5) In the middle of a corrective pattern, it's common to run out of patience while waiting for confirmation of a trend change. You have to give corrective patterns time to unfold before you jump in. This requires discipline, and a solid understanding of the many ways corrective patterns can unfold.

EWI: What's the biggest misconception among traders about using Elliott waves?

WG: (mistake 6) Too many traders think Elliott wave is a trading system that tells you exactly where to enter and exit a particular market. That's the biggest misconception. The reality is that it's an analytical and forecasting tool, which helps you develop and use your own trading system, based on your own personal risk tolerance.

EWI: What technical indicators do you believe traders over-rely on, and why?

WG: (mistake 7) Traders tend to over-rely on momentum indicators such as RSI, Stochastics and MACD to precisely spot turning points. But to paraphrase Mark Twain, markets can stay overbought or oversold a lot longer than either you or I can remain solvent.

EWI: How would you characterize today's market action, and do you teach courses that address this environment?

WG: This is a difficult stock market in the near term. Prices haven't strayed far from where they began in January. The action has yet to break out significantly to the downside or upside. This situation may not last much longer. I can suggest these online courses to deal with the current situation, and to prepare for the next big move:

This article was syndicated by Elliott Wave International and was originally published under the headline Do You Recognize These Six Common Trading Mistakes?. EWI is the world's largest market forecasting firm. Its staff of full-time analysts lead by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Annuity Definition

Indexed Annuities

The Economic Crisis No One Saw Coming: A Convenient Untruth

2010-08-10T09:54:00.001-07:00

The Economic Crisis No One Saw Coming: A Convenient Untruth - Fixed Annuity Definition, Fixed Indexed Annuities, Lifetime Income Annuity

August 9, 2010

By Elliott Wave International

The single most convenient untruth about the 2008 (and counting) financial crisis is that it was unforeseen. For two years policymakers have insisted "There was no way to know ahead of time" that the liquidity boom would come to a screeching halt. Back in November 2008, in fact, the usually tight-lipped Queen of England herself publicly described the turmoil of international markets as "awful" and openly asked a panel of experts from the London School of Economics "Why did nobody notice?"

Her Majesty is right: Most financial authorities did NOT notice the crisis before it was too late. Comedy Central's "The Daily Show with Jon Stewart" of all places provided the most poignant evidence: A March 2009 video montage shows executives and economists from the world's leading financial firms repeatedly forecasting continued upside strength in stocks, plus renewed bull market growth in financials -- right as debt markets came unhinged and the US stock market headed into a 50%-plus selloff.

Dubbed the "8-Minute Rap" (after the "18-Minute Gap" of Nixon's Watergate tapes), the Daily Show video feature sent an equally powerful message, as the clip below makes plain.

Yet even as the mainstream authorities failed to detect the economic earthquake moving below their own feet, somebody did "notice" well in advance. That person was EWI's president Bob Prechter.

The clip below is from a 2007 Bloomberg interview. Clear as PLAY, the foreseeable nature of the crisis emerges from Bob's October 19, 2007 interview.

As the historic trend change began to unfold, Bob issued this timely insight:

"We've seen the first crack in the credit structure with a huge drop in commercial paper... These are the harbingers of a change toward the downside for the stock market, commodities including oil, and the debt market itself."

Don't believe the convenient untruths. Get objective market analysis today. Download this free report that contains valuable market forecasts directly from the desk of Bob Prechter.

This article, The Economic Crisis No One Saw Coming: A Convenient Untruth, was syndicated by Elliott Wave International. EWI is the world's largest market forecasting firm. Its staff of full-time analysts lead by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Annuity Definition

Stress Test: How to Find the Safest Banks in the U.S. and Abroad

2010-08-03T09:18:00.000-07:00

Stress Test: How to Find the Safest Banks in the U.S. and Abroad - Fixed Annuity Definition, Fixed Indexed Annuities, Lifetime Income Annuity

Stress Test: How to Find the Safest Banks in the U.S. and Abroad

August 3, 2010

By Elliott Wave International

Stress test results for the biggest European banks were recently released, while the largest U.S. banks took their first stress tests in May 2009. But most people don't really care how much stress their banks are under; they are more worried about their own stress levels. One thing that adds to personal stress is worrying about whether their deposits are in a safe place. Bob Prechter has encouraged people to find the safest banks for their money since he originally wrote his New York Times best-selling book, Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression in 2002. This excerpt explains why banks of all sizes are riskier than they used to be (think about portfolios stuffed with derivatives, emerging market debt and non-performing commercial loans). You can also get a list of the Top 100 Safest U.S. Banks -- two banks per state -- that was just updated in late June with the latest available data by joining Club EWI and receiving EWI's Safe Banks report.

* * * * *
Excerpted from Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression, by Robert Prechter

Many major national and international banks around the world have huge portfolios of “emerging market” debt, mortgage debt, consumer debt and weak corporate debt. I cannot understand how a bank trusted with the custody of your money could ever even think of buying bonds issued by Russia or Argentina or any other unstable or spendthrift government. As At the Crest of the Tidal Wave put it in 1995, “Today’s emerging markets will soon be submerging markets.” That metamorphosis began two years later. The fact that banks and other investment companies can repeatedly ride such “investments” all the way down to write-offs is outrageous.

Many banks today also have a shockingly large exposure to leveraged derivatives such as futures, options and even more exotic instruments. The underlying value of assets represented by such financial derivatives at quite a few big banks is greater than the total value of all their deposits. The estimated representative value of all derivatives in the world today is $90 trillion, over half of which is held by U.S. banks. Many banks use derivatives to hedge against investment exposure, but that strategy works only if the speculator on the other side of the trade can pay off if he’s wrong.

Relying upon, or worse, speculating in, leveraged derivatives poses one of the greatest risks to banks that have succumbed to the lure. Leverage almost always causes massive losses eventually because of the psychological stress that owning them induces. You have already read of the tremendous debacles at Barings Bank, Long-Term [sic] Capital Management, Enron and other institutions due to speculating in leveraged derivatives. It is traditional to discount the representative value of derivatives because traders will presumably get out of losing positions well before they cost as much as what they represent. Well, maybe. It is at least as common a human reaction for speculators to double their bets when the market goes against a big position. At least, that’s what bankers might do with your money.

Today’s bank analysts assure us, as a headline from The Atlanta Journal-Constitution put it on December 29, 2001, that “Banks [Are] Well-Capitalized.” Banks today are indeed generally considered well capitalized compared to their situation in the 1980s. Unfortunately, that condition is mostly thanks to the great asset mania of the 1990s, which, as explained in Book One, is probably over. Much of the record amount of credit that banks have extended, such as that lent for productive enterprise or directly to strong governments, is relatively safe. Much of what has been lent to weak governments, real estate developers, government-sponsored enterprises, stock market speculators, venture capitalists, consumers (via credit cards and consumer-debt “investment” packages), and so on, is not. One expert advises, “The larger, more diversified banks at this point are the safer place to be.” That assertion will surely be severely tested in the coming depression.

There are five major conditions in place at many banks that pose a danger: (1) low liquidity levels, (2) dangerous exposure to leveraged derivatives, (3) the optimistic safety ratings of banks’ debt investments, (4) the inflated values of the property that borrowers have put up as collateral on loans and (5) the substantial size of the mortgages that their clients hold compared both to those property values and to the clients’ potential inability to pay under adverse circumstances. All of these conditions compound the risk to the banking system of deflation and depression.

Financial companies are enjoying big advances in the current stock market rally. Depositors today trust their banks more than they trust government or business in general. For example, a recent poll asked web surfers which among a list of seven types of institutions they would most trust to operate a secure identity service. Banks got nearly 50 percent of the vote. General bank trustworthiness is yet another faith that will be shattered in a depression.

Well before a worldwide depression dominates our daily lives, you will need to deposit your capital into safe institutions. I suggest using two or more to spread the risk even further. They must be far better than the ones that today are too optimistically deemed “liquid” and “safe” by both rating services and banking officials.

Inside the revealing free report, you'll discover:

The 100 Safest U.S. Banks (2 for each state)
Where your money goes after you make a deposit
How your fractional-reserve bank works
What risks you might be taking by relying on the FDIC's guarantee

Please protect your money. Download the free 10-page "Safe Banks" report now.
Learn more about the "Safe Banks" report, and download it for free here.

This article, Stress Test: How to Find the Safest Banks in the U.S. and Abroad,was syndicated by Elliott Wave International. EWI is the world's largest market forecasting firm. Its staff of full-time analysts lead by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Annuity Definition

Technicals vs. Fundamentals: Which are Best When Trading Crude Oil and Natural Gas?

2010-07-26T09:13:00.001-07:00

Technicals vs. Fundamentals: Which are Best When Trading Crude Oil and Natural Gas

Technicals vs. Fundamentals: Which are Best When Trading Crude Oil and Natural Gas?

July 26, 2010

By Elliott Wave International

If "fundamentals" drive trend changes in financial markets, then shouldn't the same factors have consistent effects on prices?

For example: Positive economic data should ignite a rally, while negative news should initiate decline. In the real world, though, this is hardly the case.

On a regular basis, markets go up on bad news, down on good news, and both directions on the same news -- almost as if to say, "Talk to the hand cuz the chart ain't listening."

Unable to deny this fly in the fundamental ointment, the mainstream experts often attempt to reconcile the inconsistencies with phrases like "shrugged off," "defied" or "in spite of."

That begs the next question: How do you know when a market is going to cooperate with fundamental logic and when it won't? ANSWER: You don't.

Get FREE access to Elliott Wave International's most intensive forecasting service for the global Energy markets. Now through noon Eastern time July 28, you can get timely intraday charts, forecasts and analysis for Crude Oil and Natural Gas. You'll also get daily, weekly and monthly analysis and forecasts for all major Energy markets and Energy ETFs. Access FreeWeek now.

Take, for instance, the first three news items below regarding the July 22 performance in crude oil, versus the fourth headline, which occurred on July 23:

Crude prices surge nearly 4% in their sharpest one-day percentage gain since May. The rally was "aided by fears that Tropical Storm Bonnie will enter the Gulf of Mexico over the weekend and disrupt oil production." (Wall Street Journal)
"Oil Prices Soar As Gulf Storm Threat Looms" (Associated Press)
"The storm should keep oil prices bubbling if it continues to strengthen and remain on track." (Bloomberg)

vs.

"Oil Slips From Surge Despite Storm Threats" (Commodity Online)

Unlike fundamental analysis, technical analysis methods don't rely on the news to explain or predict market moves. They look at the markets' internals instead.

Get FREE access to Elliott Wave International's most intensive forecasting service for the global Energy markets. Now through noon Eastern time July 28, you can get timely intraday charts, forecasts and analysis for Crude Oil and Natural Gas. You'll also get daily, weekly and monthly analysis and forecasts for all major Energy markets and Energy ETFs. Access FreeWeek now.
Annuity Definition

Quadrillion Dollar Debt: 'Day of Reckoning' Looms - Elliott Wave International

2010-07-22T09:54:00.001-07:00

Quadrillion Dollar Debt: 'Day of Reckoning' Looms - Fixed Annuity Definition, Fixed Indexed Annuities, Lifetime Income Annuity

Quadrillion Dollar Debt: 'Day of Reckoning' Looms
What Will Happen as $1,000,000,000,000,000 in Global Debt Winds Down?
July 22, 2010

By Elliott Wave International

The biggest balloon in the world is deflating.

This balloon had been inflated with a quadrillion (1015) dollars, which is to say: This balloon was filled not with air but with debt from around the globe.

What will happen as this global debt winds down? In two words: Deflationary Depression -- the likes of which could be unprecedented in history.

Want to Know How to Prosper in a Deflationary Depression?If you haven't yet given Robert Prechter's deflation argument your full attention, you should know now that yesterday was the best time to do so. Download Prechter's 60-Page Guide to Understanding Deflation here.

A thousand trillion in debt can't be wished away or swept under the rug. No one can "forgive" the debt. The consequences of unwinding this debt could be as massive as the dollar figure itself.

We've heard plenty about the debt problems of Greece, Spain, Portugal and Italy.

But how about the world's second largest economy? Consider this fact reported in the Japan Times (July 8):

"Japan's government debts are the highest the world has ever seen, at 219 percent of gross domestic product, according to the International Monetary Fund."

Then there's the world's sixth largest national economy. In January 2009, Robert Prechter wrote this in the Elliott Wave Theorist:

"British banks have amassed $4.4 trillion worth of foreign liabilities, twice Britain's annual GDP. ... England, moreover, 'has not defaulted since the Middle Ages.' The possibility that it may do so again is yet another indication that the bear market is of ... (larger) degree, exactly as Elliott wave analysts have predicted all along."

Remember, Japan and Great Britain are major world economies. Imagine what the debt totals would look like in a line-item analysis of other nations, regions, states, provinces and municipalities around the world, including the U.S.

De-leveraging will likely lead to a deflationary crash -- a "day of reckoning."

How can you prepare for a deflationary crash?

To start with, keep your money safe. As Bob Prechter mentions in the June 2010 Elliott Wave Theorist:

"Investors should be primarily in greenback cash and Treasury bills."

He also describes holdings which should be strictly avoided.

Want to Know How to Prosper in a Deflationary Depression?If you haven't yet given Robert Prechter's deflation argument your full attention, you should know now that yesterday was the best time to do so. Download Prechter's 60-Page Guide to Understanding Deflation here.
Annuity Definition

Annuities

2010-04-03T15:17:00.001-07:00

www.safeincomenow.com
www.sellingseniors.com
www.itstheleads.com
www.deferredannuityquote.com
www.bankrateannuity.com
www.annuityzoo.com
www.annuityseminar.com
www.annuityrollover.com
www.annuityratequote.com
www.annuityleads123.com
www.annuity-directory.com
www.annuitydefinition.com
www.annuitybuyersguide.com
www.annuitypension.com
www.401kannuity.com
www.indexannuityrate.com
www.deferredannuityrate.com
www.happyretiree.com

Court Remands Rule 151A back to the SEC

2009-07-21T16:57:00.000-07:00
EXCERPT from the Order

The SEC explained that this newfound “clarity” brought about by the rule would:

enhance competition because insurers who may have been reluctant to issue indexed annuities, while their status was uncertain, may decide to enter the market. Similarly, registered broker-dealers who currently may be unwilling to sell unregistered indexed annuities because of their uncertain regulatory status may become willing to sell indexed annuities that are registered, thereby increasing competition among distributors of indexed annuities.

This reasoning is flawed. The lack of clarity resulting from the “uncertain legal status” of the financial product is only another way of saying that there was not a regulation in place prior to the adoption of Rule 151A determining the status of those products under the annuity exemption of §3(a)(8). The SEC cannot justify the adoption of a particular rule based solely on the assertion that the existence of a rule provides greater clarity to an area that remained unclear in the absence of any rule. Whatever rule the SEC chose to adopt could equally be said to make the previously unregulated market clearer than it would be without that adoption. Moreover, the fact that federal regulation of FIAs would bring “clarity” to this area of the law is not helpful in assessing the effect Rule 151A has on competition. Again, creating a rule that resolves the “uncertain legal status” of FIAs might be said to improve competition. But that conclusion could be asserted regardless of whether the rule deems FIAs to fall within the SEC’s regulatory reach or outside of it. Indeed, the SEC would achieve a similar clarity if it declined outright to regulate FIAs. Section 2(b) does not ask for an analysis of whether any rule would have an effect on competition. Rather, it asks for an analysis of whether the specific rule will promote efficiency, competition, and capital formation.

The SEC’s reasoning with respect to competition supports at most the conclusion that any SEC action in this area could promote competition, but does not establish Rule 151A’s effect on competition. The SEC’s competition analysis also fails because the SEC did not make any finding on the existing level of competition in the marketplace under the state law regime. The SEC asserted competition would increase based upon its expectation that Rule 151A would require fuller public disclosure of the terms of FIAs and thereby increase price transparency. The SEC could not accurately assess any potential increase or decrease in competition, however, because it did not assess the baseline level of price transparency and information disclosure under state law.

The SEC nevertheless argues that it is not required to conduct such a detailed § 2(b) analysis because doing so would contravene the Supreme Court’s reasoning in United Benefit and VALIC. [The] SEC’s § 2(b) analysis is arbitrary and capricious because it failed to consider the extent of the existing competition in its analysis. The Commission’s efficiency analysis is similarly arbitrary and capricious. The SEC concluded that Rule 151A would promote efficiency because the required disclosures under the rule would enable investors to make more informed investment decisions about purchasing indexed annuities. The SEC advanced further that the rule’s sales practice protections would enable sellers to promote more suitable recommendations to investors; this, in turn, would lead to investors making even better informed decisions, which would offer greater efficiency. As with its analysis of competition, however, the SEC’s analysis is incomplete because it fails to determine whether, under the existing regime, sufficient protections existed to enable investors to make informed investment decisions and sellers to make suitable recommendations to investors. The SEC’s failure to analyze the efficiency of the existing state law regime renders arbitrary and capricious the SEC’s judgment that applying federal securities law would increase efficiency. Finally, the SEC’s flawed efficiency analysis also renders its capital formation analysis arbitrary and capricious.

The SEC’s conclusion that Rule 151A would promote capital formation was based significantly on the flawed presumption that the enhanced investor protections under Rule 151A would increase market efficiency. This analysis fails with the failure of its underlying premise. Having determined that the SEC’s § 2(b) analysis is lacking, we conclude that this matter should be remanded to the SEC to address the deficiencies with its § 2(b) analysis.

It is obvious that the SEC believes imposing a federal framework on FIAs would be superior to the existing patchwork of state insurance laws. Indeed, after a more thorough review of the existing state law regime, the Commission may decide ultimately that Rule 151A will promote competition, efficiency, and capital formation. Nevertheless, the Commission must either complete an analysis sufficient to satisfy its obligations under § 2(b), or explain why that section does not govern this rulemaking. Accordingly, we grant the petitions and remand for further reconsideration consistent with this opinion. So ordered.

Five Fatal Flaws of Trading

2009-07-03T09:44:00.001-07:00

By Jeffrey Kennedy

Close to ninety percent of all traders lose money. The remaining ten percent somehow manage to either break even or even turn a profit – and more importantly, do it consistently. How do they do that?

That's an age-old question. While there is no magic formula, one of Elliott Wave International's senior instructors Jeffrey Kennedy has identified five fundamental flaws that, in his opinion, stop most traders from being consistently successful. We don't claim to have found The Holy Grail of trading here, but sometimes a single idea can change a person's life. Maybe you'll find one in Jeffrey's take on trading? We sincerely hope so.

The following is an excerpt from Jeffrey Kennedy’s Trader’s Classroom Collection. For a limited time, Elliott Wave International is offering Jeffrey Kennedy’s report, How to Use Bar Patterns to Spot Trade Setups, free.

Why Do Traders Lose?

If you’ve been trading for a long time, you no doubt have felt that a monstrous, invisible hand sometimes reaches into your trading account and takes out money. It doesn’t seem to matter how many books you buy, how many seminars you attend or how many hours you spend analyzing price charts, you just can’t seem to prevent that invisible hand from depleting your trading account funds.

Which brings us to the question: Why do traders lose? Or maybe we should ask, 'How do you stop the Hand?' Whether you are a seasoned professional or just thinking about opening your first trading account, the ability to stop the Hand is proportional to how well you understand and overcome the Five Fatal Flaws of trading. For each fatal flaw represents a finger on the invisible hand that wreaks havoc with your trading account.

Fatal Flaw No. 1 – Lack of Methodology

If you aim to be a consistently successful trader, then you must have a defined trading methodology, which is simply a clear and concise way of looking at markets. Guessing or going by gut instinct won’t work over the long run. If you don’t have a defined trading methodology, then you don’t have a way to know what constitutes a buy or sell signal. Moreover, you can’t even consistently correctly identify the trend.

How to overcome this fatal flaw? Answer: Write down your methodology. Define in writing what your analytical tools are and, more importantly, how you use them. It doesn’t matter whether you use the Wave Principle, Point and Figure charts, Stochastics, RSI or a combination of all of the above. What does matter is that you actually take the effort to define it (i.e., what constitutes a buy, a sell, your trailing stop and instructions on exiting a position). And the best hint I can give you regarding developing a defined trading methodology is this: If you can’t fit it on the back of a business card, it’s probably too complicated.

Fatal Flaw No. 2 – Lack of Discipline

When you have clearly outlined and identified your trading methodology, then you must have the discipline to follow your system. A Lack of Discipline in this regard is the second fatal flaw. If the way you view a price chart or evaluate a potential trade setup is different from how you did it a month ago, then you have either not identified your methodology or you lack the discipline to follow the methodology you have identified. The formula for success is to consistently apply a proven methodology. So the best advice I can give you to overcome a lack of discipline is to define a trading methodology that works best for you and follow it religiously.

Fatal Flaw No. 3 – Unrealistic Expectations

Between you and me, nothing makes me angrier than those commercials that say something like, "...$5,000 properly positioned in Natural Gas can give you returns of over $40,000..." Advertisements like this are a disservice to the financial industry as a whole and end up costing uneducated investors a lot more than $5,000. In addition, they help to create the third fatal flaw: Unrealistic Expectations.

Yes, it is possible to experience above-average returns trading your own account. However, it’s difficult to do it without taking on above-average risk. So what is a realistic return to shoot for in your first year as a trader – 50%, 100%, 200%? Whoa, let’s rein in those unrealistic expectations. In my opinion, the goal for every trader their first year out should be not to lose money. In other words, shoot for a 0% return your first year. If you can manage that, then in year two, try to beat the Dow or the S&P. These goals may not be flashy but they are realistic, and if you can learn to live with them – and achieve them – you will fend off the Hand.

For a limited time, Elliott Wave International is offering Jeffrey Kennedy’s report, How to Use Bar Patterns to Spot Trade Setups, free.

Fatal Flaw No. 4 – Lack of Patience

The fourth finger of the invisible hand that robs your trading account is Lack of Patience. I forget where, but I once read that markets trend only 20% of the time, and, from my experience, I would say that this is an accurate statement. So think about it, the other 80% of the time the markets are not trending in one clear direction.

That may explain why I believe that for any given time frame, there are only two or three really good trading opportunities. For example, if you’re a long-term trader, there are typically only two or three compelling tradable moves in a market during any given year. Similarly, if you are a short-term trader, there are only two or three high-quality trade setups in a given week.

All too often, because trading is inherently exciting (and anything involving money usually is exciting), it’s easy to feel like you’re missing the party if you don’t trade a lot. As a result, you start taking trade setups of lesser and lesser quality and begin to over-trade.

How do you overcome this lack of patience? The advice I have found to be most valuable is to remind yourself that every week, there is another trade-of-the-year. In other words, don’t worry about missing an opportunity today, because there will be another one tomorrow, next week and next month ... I promise.

I remember a line from a movie (either Sergeant York with Gary Cooper or The Patriot with Mel Gibson) in which one character gives advice to another on how to shoot a rifle: 'Aim small, miss small.' I offer the same advice in this new context. To aim small requires patience. So be patient, and you’ll miss small."

Fatal Flaw No. 5 – Lack of Money Management

The final fatal flaw to overcome as a trader is a Lack of Money Management, and this topic deserves more than just a few paragraphs, because money management encompasses risk/reward analysis, probability of success and failure, protective stops and so much more. Even so, I would like to address the subject of money management with a focus on risk as a function of portfolio size.

Now the big boys (i.e., the professional traders) tend to limit their risk on any given position to 1% - 3% of their portfolio. If we apply this rule to ourselves, then for every $5,000 we have in our trading account, we can risk only $50-$150 on any given trade. Stocks might be a little different, but a $50 stop in Corn, which is one point, is simply too tight a stop, especially when the 10-day average trading range in Corn recently has been more than 10 points. A more plausible stop might be five points or 10, in which case, depending on what percentage of your total portfolio you want to risk, you would need an account size between $15,000 and $50,000.

Simply put, I believe that many traders begin to trade either under-funded or without sufficient capital in their trading account to trade the markets they choose to trade. And that doesn’t even address the size that they trade (i.e., multiple contracts).

To overcome this fatal flaw, let me expand on the logic from the 'aim small, miss small' movie line. If you have a small trading account, then trade small. You can accomplish this by trading fewer contracts, or trading e-mini contracts or even stocks. Bottom line, on your way to becoming a consistently successful trader, you must realize that one key is longevity. If your risk on any given position is relatively small, then you can weather the rough spots. Conversely, if you risk 25% of your portfolio on each trade, after four consecutive losers, you’re out all together.

Break the Hand’s Grip

Trading successfully is not easy. It’s hard work ... damn hard. And if anyone leads you to believe otherwise, run the other way, and fast. But this hard work can be rewarding, above-average gains are possible and the sense of satisfaction one feels after a few nice trades is absolutely priceless. To get to that point, though, you must first break the fingers of the Hand that is holding you back and stealing money from your trading account. I can guarantee that if you attend to the five fatal flaws I’ve outlined, you won’t be caught red-handed stealing from your own account.

For more information on trading successfully, visit Elliott Wave International to download Jeffrey Kennedy’s free report, How to Use Bar Patterns to Spot Trade Setups.

Jeffrey Kennedy is the Chief Commodity Analyst at Elliott Wave International (EWI). With more than 15 years of experience as a technical analyst, he writes and edits Futures Junctures, EWI's premier commodity forecasting package.

Immediate Annuities - Lifetime Income

2009-07-03T09:11:00.001-07:00

Immediate Fixed Annuity - FIXED INDEX ANNUITY DEFINITION
Income NOW riders on fixed annuities are the most flexible. You are NOT annuitizing and the income can increase when the fixed annuity increases. The income can be stopped and restarted. If the fixed annuity yields 8% one year, you can take that out instead of the income rider payment. You'll enjoy much more potential and a guaranteed income. Fixed annuities can easily be annuitized (immediate annuity) in the future if base interest rates increase substantially as they did briefly in the early 80's. The year 1982 was the best time to buy a life income annuity also known as an immediate annuity.

Equity Index Annuities: Great Idea Or Flawed Flop?

2009-06-17T08:25:00.001-07:00

NAFA Responds to Inaccuracies in IndexUniverse.com Article
Equity Index Annuities: Great Idea Or Flawed Flop?
Written by Jeremy Burger
IndexUniverse.com
Wednesday, 10 June 2009
It is hard to understand why IndexUniverse.com would choose to publish an article filled with
misleading information and factual errors when its stated goal is to provide the “industry's best
news, columns, research, and features and the website aims to be “educational, thoughtprovoking,
and, rigorously independent in perspective.” Since fixed indexed annuities have an
interest crediting formula that is calculated using an index, we thought your readers might be
interested in the facts rather than the article’s reiteration of the same errors made by those in
the investing world. NAFA hopes this information helps IndexUniverse.com meet its goals by
publishing this clarification of information and, in so doing, achieve our mutual aim of aim of
education and independence
Error #1
Some policies make you wait as long as 20 years and charge you 20 percent for first-year
withdrawals.
The Facts:
1. There are 273 products available today and the maximum surrender period is 16 years
NOT 20.
2. The majority (82%) have surrender charge periods of 10 years or less.
3. 2/3rds of the products with surrender periods of 14-16 years (less than 1/10th of the total
products available) offer interest rate bonuses up front.
4. Only one product charges 20% surrender charge in the first year and that product also
pays the customer a 10% premium bonus on all premiums paid in the first year, making
the net charge roughly 10%. This product also automatically adds a Lifetime Income
Benefit Rider that guarantees annual withdrawals. Many consumers have decided that a
bonus and guaranteed income are benefits worth considering in exchange for
committing to a longer surrender period. Had Mr. Burger done more initial research, he
would have found that most states have adopted the latest NAIC annuity standard nonforfeiture
law which does not allow net surrender charges at the level he excoriates.
Error #2
Your guaranteed minimum return… probably doesn’t apply to the full balance in your
account.
The Facts:
Mr. Burger’s error is often made by those who write for the investment world because they
typically do not understand the insurance element of guaranteed minimum interest.
The minimum guarantee is in indexed annuity productsi provide a minimum guarantee that is a
minimum interest calculation (based on the state’s non-forfeiture law) such as 2 or 3% on 90%
of premiums or the contract’s current account value, whichever is greater1. The minimum
1 Based on the products currently available.

Life Annuity-The Retirement Security Needs Lifetime Pay Act, H.R. 2748

2009-06-13T10:00:00.001-07:00

Congressman Earl Pomeroy -- Pomeroy, Brown-Waite Introduce Legislation to Promote Income Security in Retirement

Pomeroy, Brown-Waite Introduce Legislation to Promote Income Security in Retirement
Monday, June 08, 2009

Washington, D.C. – Congressman Earl Pomeroy today introduced bipartisan legislation along with Rep. Ginny Brown-Waite (R-FL) that will promote lifetime income security by providing incentives for workers to annuitize part of their retirement savings.

“For years, the federal government has recognized its duty to assist American families in building a retirement nest egg,” Pomeroy said. “Saving and investing for the long term is extremely important, especially in these challenging times. A greater retirement challenge lies ahead: managing assets to make sure that your retirement savings last a lifetime. The Retirement Security Needs Lifetime Pay Act will provide families with incentives to plan for a secure lifelong retirement.”

“American workers spend a significant portion of their careers planning for their retirement. When the economy falls on hard times, it should not mean that their plans have to go on hold as well,” Congresswoman Brown-Waite said. “This bill incentivizes workers to invest in a retirement annuity so that their golden years can go on as planned.”

The Retirement Security Needs Lifetime Pay Act, H.R. 2748, would encourage workers to annuitize some of their retirement savings by providing a 50 percent tax exclusion for up $10,000 of lifetime annuity payments each year. A lifetime annuity is the only financial vehicle that delivers a steady stream of income for life. Additionally, the bill would exclude from taxes, 25 percent of lifetime income payments from Individual Retirement Accounts (IRAs), qualified plans and similar employer-sponsored retirement savings plans other than defined benefit plans. The bill also excludes the value of longevity insurance from amounts subject to required minimum distributions and clarifies the taxation of partial annuity payments.

By providing incentives for workers to annuitize part of their retirement savings, this bill addresses the management of savings once an individual reaches retirement, an issue previously ignored by public policy. Congress has gone to great lengths to provide incentives to encourage workers to accumulate enough savings for retirement. However, upon retirement, workers face numerous risks in managing those savings throughout their retirement years.

AnnuityDefinition.com

Equity Indexed Annuity: Forbes Article Errors, Omissions and Half-Statements

2009-06-10T05:46:00.001-07:00

Equity‐Indexed Annuities: A Costly Way to Limit Your Lossesi Strong recent results mask plenty of pitfalls.
By Scott Woolley
June 05, 2009
Forbes.com
NAFA, the National Association for Fixed Annuities, is an educational trade association incorporated to
promote the awareness and understanding of fixed annuities. The common media malady is that fixed
annuities – regardless of the interest crediting formula – are investment products. Fixed annuities are
no more purchased as investments than are life or long term care insurance ‐ nor should they be. All of
these products are purchased to protect and preserve assets. Fixed indexed annuities offer guaranteed
death benefits, minimum interest and income you cannot outlive. Fixed indexed annuities can also
provide additional interest over and above the guarantees when the index performance allows.
The headline demonstrates a complete misunderstanding of these products. They do not “limit your
losses” from stock market declines they ELIMINATE the possibility that any of your premium or earned
interest will be lost. While the list of errors, omissions and half‐statements in this article is very lengthy
indeed, we will limit our corrections to the most egregious ones. Helping Americans to better
understand fixed index annuities will encourage them to learn more about a product that has saved
millions of dollars of retirement savings from equity losses.
1. A major error in the article is the assertion that fixed indexed annuities are offered by Prudential
and Met Life. Neither company offers a fixed indexed annuity. Prudential offers only one choice
of a fixed deferred annuity product and Met Life offers two (single and flexible premium)
product choices and none of these deferred annuities credit interest based on the performance
of an index. MassMutual's product is a single premium variable annuity where the purchase
payment is allocated between a fixed account and an equity indexed subaccount like the S&P
500. Genworth exited the indexed annuity marketplace in October 2008. It is curious that you
did not choose to inform your readers with company names and website links to the real “major
companies” that offer indexed annuities. Just about 15 minutes of research would have
informed you that the four companies you named are not fixed indexed annuity carriers.
2. The article itself contradicts FINRA’s statement about fixed indexed annuities that “one of the
most confusing features is the method used to calculate the gain.” The article easily explains
the feature using a mere 45 words.
3. The bias of the article is transparent when the only “regulatory authorities” referenced are the
two that are seeking to claim jurisdiction over a product they actually do not understand. While
NAFA certainly has views that differ from those quoted, an effort at objectivity should have
referenced our White Paper on Indexed Annuity Productsii, so that readers could draw their own
conclusions. Also, IMSAiii and the NAICiv also provide good information for consumers on their
respective websites.

4. It is good that you acknowledge that fixed indexed annuities show strong results, but why do
you limit it to recent history? Perhaps because during the recent economic crisis, while millions
of Americans have seen their 401(k) and retirements savings slashed in half, owners of fixed
indexed annuities have not lost one penny of their account value? But it is also true that the
tradeoff for this protection has also rewarded them with very respectable interest earnings.
Below is NAFA’s report by Miguel A. Herce, Ph.D of CRA International, Inc. showing the
annualized return over 10‐year periods. Many American’s might disagree that 6.5% is a “costly
way to limit losses.”
Period S&P 500 with no Dividends Monthly Averaging Index
(0% floor)
JAN 1975 – OCT 2004 11.6% 7.7%
JAN 1975 – OCT 2008 10.8% 7.5%
JAN 1926 – OCT 2008 7.6% 7.0%
JAN1995 – OCT 2008 6.1% 6.5%
If you are reluctant to take our word for it, perhaps you will trust the excerpt from a fellow journalist,
Steven Hartv, who writes:
If you are generally concerned with potential downswings in the market, then an index annuity
can be a great choice for your investing needs. You can participate in the potential of a strong
market run without having to deal with severe loss during a sharp market downturn. In addition,
the overall principal is safely protected so that no loss will occur. The setup of the index annuity
to give a profit at a minimum rate of return, however, ensures that the investor still sees a profit
(however small) during the lean times of the index. In other words, the index annuity seems to
provide the chance to have your cake and eat it too with a low‐risk financial product that you
can benefit from over time.
i http://resources.nafa.com/files/2009/06‐jun/6‐9‐forbesresponse.pdf
ii http://www.nafa.us/local_links.php?action=jump&catid=7&id=105
iii http://www.nafa.us/local_links.php?action=jump&catid=7&id=106
iv http://resources.nafa.com/files/2009/06‐jun/6‐9‐naicbuyersguidetoannuities.pdf
v http://www.affsphere.com/Money‐and‐Finance/Annuities/What‐is‐an‐Index‐Annuity‐1.html

Equity-Indexed Annuities: A Costly Way To Limit Your Losses

2009-06-09T12:24:00.001-07:00

From: Sheryl Moore
Sent: Monday, June 08, 2009 7:24 PM
To: 'readers@forbes.com'
Subject: FW: ARTICLE: Equity-Indexed Annuities: A Costly Way To Limit Your Losses

Dear Forbes Editor,

I am an independent market research analyst who specializes exclusively in the indexed annuity and indexed life markets. I have tracked the companies, products, marketing, and sales of these products for over a decade. I do not endorse any company or financial product specifically, but I do believe in the value proposition of indexed products. I recently had the occasion to read your article, “Equity-Indexed Annuities: A Costly Way To Limit Your Losses.” As the foremost authority on indexed annuities, I wanted to personally respond to the material misstatements and misleading testimonial by Scot Woolley in this article. I was absolutely appalled that a source as credible as Forbes would publish such a blatantly false and ignorant article. Scott Woolley appears to be very uneducated on indexed annuities, and the insurance industry in general. I would like to think that Forbes generally does a better job at monitoring the accuracy of their contributors’ articles than they did on this occasion.

Specifically, the most shocking and obvious mistake in Woolley’s piece is the fact that Massachusetts Mutual Life Insurance Co, and Prudential Financial have never offered indexed annuities, EVER. Yet, he sites them as being carriers that underwrite these products. In addition, MetLife does not offer indexed annuities themselves, but instead offers their agents a choice of four indexed annuities that are offered by other insurers. Genworth Financial exited the indexed annuity market on September 20, 2008. Certainly Woolley could not have done his homework on this article, as all one needs to do is Google “first quarter 2009 indexed annuity sales,” and they would have found the most credible resource on current carriers in the market: my firm’s sales data. It is distressing that this reporter put so little effort into backing-up his information.

In addition, indexed annuities have not been referred to as “equity indexed annuities” since the late 1990s. The insurance industry has been careful to enforce a habit 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 instability (such as what we are experiencing now).

Also, indexed annuities are not a “combination investment and insurance product[s].” They are not an investment at all. They are a fixed insurance product that provides minimum guarantees, death benefits, and an income stream that consumers cannot outlive. Excess interest is credited based on the performance of an outside stock index, such as the S&P 500. The indexed annuity consumer is never directly invested in the stock market, and thereby never subject to the risk of loss due to market downturn. These benefits, coupled with this unique interest crediting, are what makes indexed annuities such an appealing, value-added product- particularly during times of market turmoil. The products are regulated by state insurance divisions, like other fixed insurance products.

Indexed annuities do provide limited upside interest potential, unlike securities products. This is what allows the insurance company to be able to afford the minimum guarantee that is provided to the consumer. So, regardless of the market’s performance, the worst the client can receive is zero interest crediting- no risk to principal as a result of market losses. No other product can offer such a strong value proposition, coupled with the insurance benefits of the indexed annuity. It is important to note that if the potential gains were unlimited on indexed annuities, there would be no guarantees, and THAT would be a variable annuity, not a fixed insurance product. We in the indexed annuity industry, are happy for this differentiation, as it is what drives the sales of these products.

Scott Woolley’s understanding of the basic pricing of indexed annuities is flawed. He believes that “the insurers who sell the annuities use derivatives to put collars around the annuities with limit both the upside and downside for investors.” In reality, the insurance company invests the majority of their funds in bonds, which cover the indexed annuity’s minimum guarantees. The invest a minute percentage of the funds in options, which provide the index-linked interest on the products. Contrary to Woolley’s allusions, the insurance companies have no control over the prices for the bonds and options. So, when the market becomes volatile, the same dollar that purchased the company a potential indexed annuity gain of 8% last month, may only purchase them a potential indexed annuity gain of 6% presently. So, while “the counterparties selling the hedges” may “jack up their fees,” as a result of market volatility, that merely translates into lower caps, participation rates, and higher spreads that are passed on to the consumer. This is not discretionary on behalf of the insurance company. Indexed annuities not only have minimum guarantees, but also minimum guaranteed caps/participation rates, and maximum spreads that are approved by the insurance divisions in the state the product is being offered in, prior to the product ever being made available for sale. When these caps, participation rates and spreads become unattractive compared to fixed annuities, sales of indexed annuities decline.

As far as “other fees” being “so high as to make the product a lousy buy”- indexed annuities do not have fees. A few indexed annuities offer an optional rider that has an explicit, stated account valued-based charge. However, these products are not like variable annuities which have numerous fees such as administrative fees, mortality & expense charges, as well as fees for optional riders. There are no “fat expenses” on these products, nor “ways to make it hard” to understand what you are really paying. All annuity costs and benefits are clearly disclosed in the disclosures that the consumer signs at the time of purchase. Yes, all indexed annuities have surrender charges. All fixed annuities have surrender charges. These charges are ten years on average, but can be as low as one year. In addition, a large percentage of the longer-term products offer an up-front premium bonus to provide an incentive to the annuity consumer. A surrender penalty is merely what allows the insurance company to credit competitive interest rates to the annuity, while the client has agreed to keep their money with the insurance company. The insurance company invests the consumers premiums, in order to make a return on the money, and credit this competitive interest rate. Without a surrender penalty, the insurance company would incur tremendous expenses that they would not be able to recover. In short, surrender charges are a pricing measure that allows insurance companies to make good on their promises, and back-up their claims-paying abilities.

Woolley’s citing of firms that are seeking to extend their regulatory authority beyond the scope of their purview is incredulous. Both the SEC and FINRA have vested interests in regulating these fixed insurance products. They do not regulate these products today, and therefore the state insurance division would be a far more credible resource on these products. They cannot be considered a reliable source on indexed annuities, as they have a plethora of inaccurate information on the products on their public websites and “alerts.”

Unfortunately, a few complex products have afforded this industry the perception of complexity over the past 15 years. However, the bulk of indexed annuities sold today are very simple to understand. In fact, 95.2% of indexed annuities offered today have crediting methods based on the simple formula of (A – B)/B. All indexed annuities limit potential indexed interest through the use of a pricing lever such as a participation rate, a cap, or a spread. Typically, only one of these levers is used to limit the potential indexed interest on the annuity. However, the bottom line is that the crediting method and pricing lever used are irrelevant. Indexed annuities are priced to return about 1% - 2% greater than other traditional fixed money instruments. So, if fixed annuities are earning 5% today, and indexed annuity consumer can expect to receive 6% - 7% interest over the life of their indexed annuity. Sure, some years they will receive zero, and other years they may receive double-digit gains. However, the end goal is to receive a rate that is competitive with other safe money places, not to compete with securities products.

Every single indexed annuity ever sold limits the consumer’s risk of loss as a result of the market downturn at ZERO. No indexed annuity consumer has ever received a negative adjustment to their annuity’s value as a result of a market decline. This is precisely why these products are so appealing. In addition, when the annuity receives zero crediting, the market’s low point (the end measurement for the crediting method) is now the beginning date for the next index measurement on these products. This provides a tremendous opportunity for indexed gains when the market rebounds.

As a the foremost expert and consultant in this market, I can tell you that I have never heard of David Babbel. I can neither confirm nor deny the validity of his study, as neither myself nor my clients use him as a resource on these products. The bottom line is that indexed annuities are a great solution for millions of Americans that cannot stomach putting their retirement dollars at risk in the market. On the other hand, these same consumers can look forward to the opportunity for greater interest crediting than what they could earn at their local bank.

I was astounded to see Mr. Woolley’s statement that “getting stuck in these contracts if you need the money early” is a big problem. In reality, every indexed annuity sold today allows consumers annual penalty-free access to their account value, should the need arise. This amount is typically 10% of the annuity’s value annually, but it can be as high as 20%. In addition, 9 out of 10 fixed annuities provide penalty-free access to the account value in the event of certain triggers such as nursing home confinement, terminal illness, disability and even death. Quite contrary to this article’s statements, indexed annuities are some of the most liquid retirement vehicles available today.

Even more damaging was Scott Wooley’s statement that “many insurers rescind gains you may be owed if you get out early.” Exactly ONE of the 275 indexed annuities sold today works in this manner. In addition, sales of this product accounted for less than 2% of total industry sales as of the first quarter of 2009.

While it is true that all annuities are intended to be a long-term commitment, Mr. Woolley seems to miss the big picture. What makes indexed annuities the most important part of millions of American’s retirement plans is that indexed annuity consumers are more risk averse than individuals investing in securities products such as stocks, bonds, and mutual funds. Indexed annuities are a “safe money place,” intended to be compared against other safe money places (i.e. fixed annuities and certificates of deposit). Any insurance agent or advisor selling these products knows the difference. Why doesn’t Mr. Woolley, who purports himself as an expert on these products?

In closing, it would be so greatly appreciated if you would provide a correction to your readers on this blatantly false article. There are millions of Americans relying on the accuracy of your information, and clarifying Mr. Woolley’s article is a good way to attempt to repair the damage of his statements.

Please feel free to let me know if I can serve as a resource to you or your editorial staff in the future.

Thank you.

Sheryl J. Moore

President and CEO

LifeSpecs.com

AnnuitySpecs.com

Advantage Group Associates, Inc.

(515) 262-2623

Index Annuities

2009-06-08T13:17:00.001-07:00

Forbes.com - Magazine Article

Forbes.com

Personal Finance
Equity-Indexed Annuities: A Costly Way To Limit Your Losses
Scott Woolley, 06.05.09, 5:35 PM ET

Their unsexy name aside, there's something undeniably seductive about equity-indexed annuities (EIA). Sold by insurance companies, these combination investment and insurance products promise investors a piece of any stock market gains while limiting downside when the market tanks. At the end of the investment, or accumulation, period, the annuity's owner is typically offered either a lump-sum distribution of the proceeds or regular payments based on the ending balance.

Over the past 15 years, the products have become increasingly popular and are offered by major insurers like Massachusetts Mutual Life Insurance Co., Prudential Financial, MetLife and Genworth Financial. While the investment features have looked increasingly alluring, the catch is that the stock market's wild seesawing could hardly have been better designed to enrich holders of equity-indexed annuities. Since 1995, these annuities have easily outpaced the S&P 500 and bond indexes alike.

"There is no asset category that outperformed them. We were extremely surprised, really just amazed," says David Babbel, professor emeritus of insurance and risk management, who conducted a study of equity-index annuity returns beginning in 1995.

Still, there are plenty of reasons to take a hard look at equity-indexed annuities before adding them to you portfolio. While rules differ, the basic idea is simple enough. The insurers who sell the annuities use derivatives to put collars around the annuities, which limit both their upside and downside for investors.

Tricky questions for buyers: Are those offsetting hedges being passed along at a fair price? And are other fees so high as to make the product a lousy buy?

The answer is "no" frequently enough that the investor alerts are posted by both the Securities and Exchange Commission and the Financial Industry Regulatory Authority. The products "are anything but easy to understand. One of the most confusing features of an EIA is the method used to calculate the gain in the index to which the annuity is linked," FINRA warns.

Typically, equity-linked annuities come with "participation rates" that limit the amount of market gains in which annuity holders share. If a contract has a 70% participation rate and the S&P climbs 10%, the annuity holder gets a 7% bump, for example. In exchange, the investor receives a loss limit, which often guarantees that he will do no worse than break even each calendar year. For 2008, when the market fell 38%, annuity investors' relative returns look brilliant.

Babbel, who has consulted for the insurance industry, is quick to point out that the period he studied was a highly unusual one, marked by quick, sharp drops in the market. Those are precisely the kind of collapses that equity-indexed annuities are good at sidestepping.

Even if you assume that the market will perform during the next 15 years like it did during the past 15, there's no guarantee that the counterparties selling the hedges won't jack up their fees and lower the performance of the equity indexed annuities.

Then there are the fees investors are likely to pay for the privilege of owning an equity-linked annuity. Like other deferred annuities, equity-index features regularly have fat expenses built in, often in ways that make it hard, if not impossible, to understand what you're really paying.

Another big problem: getting stuck in these contracts if you need the money early. Many come with sizable surrender fees that remain in force for several years. What's more, many insurers rescind gains you may be owed if you get out early.

As the old investing saw goes: Past performance is no guarantee of future results. If you have a long-term horizon and want to limit your potential losses, there are probably better ways to do it than equity-indexed annuities. Consider owing a mix of diversified, low-cost bond index funds to smooth out the bumps next time your equity holdings take a hit.

Also see: www.forbes.com/forbes/2008/1208/151.html

Index Annuities - The SEC's Annuity Grab

2009-04-10T12:59:00.001-07:00

Mary Schapiro's Securities and Exchange Commission Seeks to Extend Control Over Fixed Indexed Annuities - WSJ.com

An eternal Washington truth is that the more a federal agency gets beat up for regulatory failures, the more of the world it attempts to regulate. Witness the Securities and Exchange Commission, which has responded to recent criticism with a dubious power grab over another industry.

This particular overreach is aimed at fixed indexed annuities, a niche in the wider annuity market. Like traditional annuities, purchasers of the fixed index variety are guaranteed the return of their principal and a certain level of interest. The twist is that they also earn interest based on the upside performance of stock or bond indexes, say, the S&P 500. If the market goes up, investors get more. If it goes down, investors still get their principal and minimum interest.

Whatever their merits, these annuities have always been treated as insurance products, subject to myriad state rules that govern their marketing and sale, and the capital requirements of insurers. While the 1933 securities act gave the SEC the power to regulate securities, it exempted annuities.

Until last year, that is, when then SEC chief Christopher Cox announced his agency would regulate fixed indexed annuities. At the time, he claimed there were widespread sales abuses and that he was stepping up to protect senior citizens. Mr. Cox argued these annuities were "securities" that could be regulated by the SEC because they were tied to indexes and thus involved "risk."

This didn't go down well with state insurance commissioners, who explained their oversight and dared the agency to prove its sales abuse claims. The SEC couldn't do so, and by rule-writing time it was admitting that "the presence or absence of sales practice abuses is irrelevant." All that mattered was the risk: Specifically, the SEC claimed the risk to the annuity purchaser was that the market would rise, and that he'd get more than his minimum guarantee. In the age of Bernie Madoff, the SEC is thus putting itself on high alert to protect people whose only risk is making more money than they expect.

A coalition of insurers filed suit to block the proposed SEC rule in D.C. Circuit Court last month and has been granted expedited review. The National Association of Insurance Commissioners joined the legal fun this week. The suits note that a federal court has specifically ruled that these products are annuities, not securities. They also point out that the SEC has been negligent in considering the burden of its new rule, which by the agency's own admission will cost insurers $100 million in the first-year alone. In his blunt dissent to the rule, SEC Commissioner Troy Paredes noted the SEC was "entering into a realm that Congress prohibited us from entering" and would hurt small businesses and consumers.

This kind of regulatory wanderlust is all too typical of the modern SEC, which was once known as a cautious regulator but now looks for ever more financial land to grab. Never mind that the Madoff debacle, which followed the mutual fund late-trading fiasco, shows that the SEC can't properly supervise its current turf. There's a case to be made for national insurance regulation, including annuities, but the place to make that case is Congress. New SEC Chairman Mary Schapiro won't help investors or the reputation of her agency by continuing this legally suspect lunge for more power.

What Are The Benefits Of An Annuity?

2009-01-02T07:16:00.001-08:00

Benefits of an Annuity

Annuities are an excellent tool to help you plan
for your financial security. Fixed annuities offer a variety of benefits including
tax-deferred growth, ability to avoid probate, and lifetime income.

Tax-Deferred Growth

Tax-deferred annuity growth allows your money to grow faster because
you earn interest on dollars that would otherwise be paid as taxes. Your
principal earns interest, the interest compounds within the contract, and the
money you would have paid in taxes earns interest.

May Avoid Probate

Annuities offer the ability to name a beneficiary, which may
minimize the expense, delays, and publicity that comes with probate. Your named
beneficiary may receive death proceeds as either a lump sum or monthly income.

Lifetime Income

An immediate annuity can provide you with a guaranteed income
stream with the purchase of a tax-deferred annuity. You have the ability to
choose from several different income options, including life or a specific
period. With non-qualified plans, a portion of each income payment represents a
return of premium that is not taxable, reducing your tax
liabilities.

At McLeod Agency we understand that, depending on your
individual situation, you need the ability to choose whatever type of annuity
fits you best. With McLeod Agency, you have the ability to choose:

Traditional Fixed Annuity – Offers a
declared fixed interest rate that is guaranteed for a specific period and
guaranteed to never go below a specific percentage.

Index Annuity – Interest rate credited to
your annuity contract is linked to specific market indices that you can choose
on an annual basis. Once the interest is credited you are guaranteed that it can
never go down based on future market fluctuations.

Immediate Annuity – You are guaranteed an
income stream ranging from a specific period of time to your entire life. An
immediate annuity offers a solution to the problem of outliving your money.

What are the advantages and disadvantages of an Equity-Indexed Annuity?

2008-12-31T07:10:00.001-08:00

What are the advantages and disadvantages of an Equity-Indexed Annuity?
The major advantage of an equity-indexed annuity over other types of deferred annuity products is potentially higher interest rates available from links to equity indexes, which historically have provided significantly higher yields than fixed interest rate products. The major advantage, of course, may be the major disadvantage also, particularly in periods of index volatility. However, all equity-indexed annuities have an underlying minimum interest rate guarantee which guarantees you will never lose your premium due to index fluctuations or volatility. Thus the equity-indexed annuity provides the best of both worlds-linkage to equity indexes with no risk due to index volatility and safety of premium.

Annuity Guide

Fixed Annuity

What are the advantages and disadvantages of a Variable Annuity?

2008-12-30T08:58:00.001-08:00

What are the advantages and disadvantages of a Variable Annuity?

The advantage of a Variable Annuity is the ability to place your annuity
premium into equity investments such as stocks, bonds or mutual funds
and participate in the potentially higher increases available
historically in the equity or bond markets.
Increases in your Variable
Annuity are tax deferred until they are actually withdrawn from the
contract or annuitized. All increases in a Variable Annuity are taxed
as ordinary income the year the money is withdrawn.
The major
disadvantage of a Variable Annuity is that your assets, including your
premium, are subject to market risk, i.e. loss in value based upon poor
performance of the markets. As with a fixed deferred annuity, your
purchase of a Variable Annuity should be viewed as a means to fund your
long-term retirement goals.
Historically, products in the equity
markets have resulted in higher increases than fixed rate products. Of
course, many factors are important in determining whether a Variable
Annuity is right for you, including your age, retirement goals and
aversion to risk. If you are young and looking to preserve significant
funds for your long-term retirement needs, a Variable Annuity is an
excellent way to do so.
If you are older and closer to retirement, or
simply desire to preserve your accumulated assets by purchasing a
secure vehicle, a fixed deferred annuity may be the best choice.

Annuity Surrender Charges and How To Avoid Them.

2008-12-27T08:00:00.001-08:00

Is there any way to avoid the annuity surrender or early withdrawal charges?

Yes.
With most fixed deferred annuities, surrender or withdrawal charges are
waived if you (1) die;
(2) become confined to a hospital or nursing
home for a specified period; or
(3) you choose to take a guaranteed
income stream. In addition, most fixed deferred annuities allow you
take up to 10% of your annuity contract value each year without incurring a
surrender or withdrawal charge.
See tax consequences of early
annuity withdrawals. Annuity rollover.

There
are no penalties on distributions if:
(1) You are older than age 59 ½ (2) Distributions are made on or after
the death of the owner of the annuity (3) Become disabled
(4) Distributions are made as a series of substantially equal periodic
payments (not less than annually) for your life or your life expectancy
or joint life expectancies of you and your designated beneficiary
(5) Distributions are made under a single premium immediate annuity
with a starting date no later than one year from the date you purchase
the annuity.
(6) If the distributions are made under certain annuities issued as a
part of a structured settlement agreement.
There are additional exceptions in the case of IRAs. Please contact
your tax advisor for more details.

401k Annuity

Annuity Rate

What Are Advantages and Disadvantages of a Fixed Annuity?

2008-12-26T08:24:00.001-08:00

What are the advantages and disadvantages of a Fixed Deferred Annuity?

The
major advantages of a fixed deferred annuity are guarantee of premium
and tax deferral. Generally, fixed deferred annuities appeal to the
risk averse who are looking to preserve funds for retirement with
guarantee of premium, competitive fixed rate interest guarantees and no
risk to premium. The major disadvantage of a fixed rate deferred
annuity is that fixed rate guarantee-type products have provided lower
growth than those available historically in the equity markets. Of
course, many factors are important in determining whether a fixed rate
deferred annuity is right for you, including your age, retirement goals
and aversion to risk. If you are older and closer to retirement, or
simply desire to preserve your assets in a secure vehicle, a fixed
deferred annuity may be the best choice. If you are younger and looking
to preserve significant funds for your long-term financial needs and
are willing to take greater risk, an Equity-Indexed or Variable Annuity
might be a better alternative at the present time.

What is a Fixed Deferred Annuity?

2008-12-23T12:33:00.001-08:00

A Fixed Deferred Annuity is a contract between you and the insurance company which pays a guaranteed current interest rate.
The interest rate may be guaranteed for one or more years and earns compound interest. The interest earnings compound on a tax-deferred basis.
Fixed deferred annuities are offered either on a single premium basis, i.e. you give the insurance company a lump sum premium payment, (typically $5,000 or more) or on a flexible premium basis, i.e. you pay a lower re-occurring premium payment on a monthly, quarterly, or annual basis. In addition to tax deferral, fixed deferred annuities offer safety of your premium.
Fixed deferred annuities offer a current interest rate which may never be less than a lifetime minimum guaranteed interest rate (typically 3%).
The current interest rate is declared and guaranteed by the insurance company. Thus your premium in a fixed deferred annuity is not subject to market risk associated with volatile financial markets.
Fixed deferred annuities have penalties for early withdrawal called surrender charges or withdrawal charges. These charges typically decline over the length of the surrender charge period.

Dissent Regarding Final Rule 151A Index Annuities

2008-12-18T09:08:00.001-08:00

SEC Speech: Opening Remarks and Dissent Regarding Final Rule 151A: Indexed Annuities and Certain Other Insurance Contracts;(Troy A. Paredes) Washington, D.C.: December 17, 2008

Speech by SEC Commissioner:
Opening Remarks and Dissent Regarding Final Rule 151A
Indexed Annuities and Certain Other Insurance Contracts
by
Commissioner Troy A. Paredes
U.S. Securities and Exchange Commission
Open Meeting of the Securities & Exchange Commission
Washington, D.C.
December 17, 2008

Thank you, Chairman Cox.

I believe that proposed Rule 151A addressing indexed annuities is rooted in good intentions. For instance, at the time the rule was proposed, the Commission watched a television clip from Dateline NBC that described individuals who may have been misled by seemingly unscrupulous sales practices into buying these products. Part of our tripartite mission at the SEC is to protect investors, so there is a natural tendency to want to act when we hear stories like this.

However, our jurisdiction is limited; and thus our authority to act is circumscribed. Rule 151A is about this very question: the proper scope of our statutory authority.

In our effort to protect investors, we cannot extend our reach past the statutory stopping point. Section 3(a)(8) of the Securities Act of 1933 ('33 Act) provides a list of securities that are exempt from the '33 Act and thus, by design of the statute, fall beyond the Commission's reach. The Section 3(a)(8) exemption includes, in relevant part, "[a]ny insurance or endowment policy or annuity contract or optional annuity contract, issued by a corporation subject to the supervision of the insurance commissioner . . . of any State or Territory of the United States or the District of Columbia." I am not persuaded that Rule 151A represents merely an attempt to provide clarification to the scope of exempted securities falling within Section 3(a)(8). Instead, by defining indexed annuities in the manner done in Rule 151A, I believe the SEC will be entering into a realm that Congress prohibited us from entering. Therefore, I cannot vote in favor of the rule and respectfully dissent.

Rule 151A takes some annuity products (indexed annuities), which otherwise may be covered by the statutory exemption in Section 3(a)(8), and removes them from the exemption, thus placing them within the Commission's jurisdiction to regulate. If the Commission's Rule 151A analysis is wrong — which is to say that indexed annuities do fall within Section 3(a)(8) — then the SEC has exceeded its authority by seeking to regulate them. In other words, the effect of Rule 151A would be to confer additional authority upon the SEC when these products, in fact, are entitled to the Section 3(a)(8) exemption.

The Supreme Court has twice construed the scope of Section 3(a)(8) for annuity contracts in the VALIC and United Benefit cases.1 I believe the approach embraced by Rule 151A conflicts with these Supreme Court cases. Although neither VALIC nor United Benefit deals with indexed annuities directly, the cases nevertheless are instructive in evaluating whether such a product falls within the Section 3(a)(8) exemption. And despite the adopting release's efforts to discount its holding, at least one federal court applying VALIC and United Benefit has held that an indexed annuity falls within the statutory exemption of Section 3(a)(8).2

When fixing the contours of Section 3(a)(8), the relevant features of the product at hand should be considered to determine whether the product falls outside the Section 3(a)(8) exemption. Rule 151A places singular focus on investment risk without adequately considering another key factor — namely, the manner in which an indexed annuity is marketed.

Moreover, I believe that Rule 151A misconceptualizes investment risk for purposes of Section 3(a)(8). The extent to which the purchaser of an indexed annuity bears investment risk is a key determinant of whether such a product is subject to the Commission's jurisdiction. Rule 151A denies an indexed annuity the Section 3(a)(8) exemption when it is "more likely than not" that, because of the performance of the linked securities index, amounts payable to the purchaser of the annuity contract will exceed the amounts the insurer guarantees the purchaser. This approach to investment risk gives short shrift to the guarantees that are a hallmark of indexed annuities. In other words, the central insurance component of the product eludes the Rule 151A test. More to the point, Rule 151A in effect treats the possibility of upside, beyond the guarantee of principal and the guaranteed minimum rate of return the purchaser enjoys, as investment risk under Section 3(a)(8). I believe that it is more appropriate to emphasize the extent of downside risk — that is, the extent to which an investor is subject to a risk of loss — in determining the scope of Section 3(a)(8). When investment risk is properly conceived of in terms of the risk of loss, it becomes apparent why indexed annuities may fall within Section 3(a)(8) and thus beyond this agency's reach, contrary to Rule 151A.

Not only does Rule 151A seem to deviate from the approach taken by courts, including the Supreme Court, but it also appears to depart from prior positions taken by the Commission. For example, in an amicus brief filed with the Supreme Court in the Otto case,3 the Commission asserted that the Section 3(a)(8) exemption applies when an insurance company, regulated by the state, assumes a "sufficient" share of investment risk and there is a corresponding decrease in the risk to the purchaser, such as where the purchaser benefits from certain guarantees. Yet Rule 151A denies the Section 3(a)(8) exemption to an indexed annuity issued by a state-regulated insurance company that bears substantial risk under the annuity contract by guaranteeing principal and a minimum return.

In addition, Rule 151A seems to diverge from the analysis embedded in Rule 151. Rule 151 establishes a true safe harbor under Section 3(a)(8) and provides that a variety of factors should be considered, such as marketing techniques and the availability of guarantees. The Rule 151 adopting release even indicates that the rule allows for certain "indexed excess interest features" without the product falling outside the safe harbor.

An even more critical difference between Rule 151 and Rule 151A is the effect of failing to meet the requirements under the rule. If a product does not meet the requirements of Rule 151, there is no safe harbor, but the product nevertheless may fall within Section 3(a)(8) and thus be an exempted security. But if a product does not pass muster under the Rule 151A "more likely than not" test, then the product is deemed to fall outside Section 3(a)(8) and thus is under the SEC's jurisdiction. In essence, while Rule 151 provides a safe harbor, Rule 151A takes away the Section 3(a)(8) statutory exemption.

I am not aware of another instance in the federal securities laws where a "more likely than not" test is employed, and for good reason. A "more likely than not" test does not provide insurers with proper notice of whether their products fall within the federal securities laws or not. If an insurer applies the test in good faith and gets it wrong, the insurer nonetheless risks being subject to liability under Section 5 of the Securities Act, even if the insurer had no intent to run afoul of the federal securities laws. In addition, under the "more likely than not" test, the availability of the Section 3(a)(8) exemption turns on the insurer's own analysis. Accordingly, it is at least conceivable that the same product could receive different Section 3(a)(8) treatment depending on how each respective insurer modeled the likely returns.

Further, I am concerned that Rule 151A, as applied, reveals that the "more likely than not" test, despite its purported balance, leads to only one result: the denial of the Section 3(a)(8) exemption. In practice, Rule 151A appears to result in blanket SEC regulation of the entire indexed annuity market. The adopting release indicates that over 300 indexed annuity contracts were offered in 2007 and explains that the Office of Economic Analysis has determined that indexed annuity contracts with typical features would not meet the Rule 151A test. Indeed, the adopting release elsewhere expresses the expectation that almost all indexed annuity contracts will fail the test. If everyone is destined to fail, what is the purpose of a test? Further, there is at least some risk that in sweeping up the index annuity market, the rule may sweep up other insurance products that otherwise should fall within Section 3(a)(8).

The rule has other shortcomings, aside from the legal analysis that underpins it. These include, but are not limited to, the following.

First, a range of state insurance laws govern indexed annuities. I am disappointed that the rule and adopting release make an implicit judgment that state insurance regulators are inadequate to regulate these products. Such a judgment is beyond our mandate or our expertise. In any event, Section 3(a)(8) does not call upon the Commission to determine whether state insurance regulators are up to the task; rather, the section exempts annuity contracts subject to state insurance regulation.

Second, as a result of Rule 151A, insurers will have to bear various costs and burdens, which, importantly, could disproportionately impact small businesses. Some even have predicted that companies may be forced out of business if Rule 151A is adopted. Such an outcome causes me concern, especially during these difficult economic times. Even when the economy is not strained, such an outcome is disconcerting because it can lead to less competition, ultimately to the detriment of consumers.

Third, the Commission received several thousand comment letters since Rule 151A was proposed in June 2008. Consistent with comments we have received, I believe that there are more effective and appropriate ways to address the concerns underlying this rulemaking. One possible alternative to Rule 151A would be amending Rule 151 to establish a more precise safe harbor in light of all the relevant facts and circumstances attendant to indexed annuities and how they are marketed. A more precise safe harbor would provide better clarity and certainty in this area — regulatory goals the Commission has identified — and would preserve the ability of insurers to find an exemption outside the safe harbor by relying directly on Section 3(a)(8) and the cases interpreting it. I believe further exploration of alternative approaches is warranted, as is continued engagement with interested parties, including state regulators.

In closing, I request that my remarks be included in the Federal Register with the final version of the release. My remarks today do not give a full exposition of the rule's shortcomings, but rather highlight some of the key points that lead me to dissent. I wish to note that these dissenting remarks just given represent my view after giving careful consideration to the range of arguments presented by the Commission's staff, particularly the Office of General Counsel, the commenters, and my own counsel, as well as those of my fellow Commissioners. Although I cannot support the rule, I nonetheless thank the staff for the hard work they have devoted to its preparation.

Endnotes

1See generally SEC v. Variable Annuity Life Ins. Co. of Am., 359 U.S. 65 (1959); SEC v. United Benefit Life Ins. Co., 387 U.S. 202 (1967).

2See Malone v. Addison Ins. Mktg., Inc., 225 F. Supp. 2d 743 (W.D. Ky. 2002).

3Otto v. Variable Annuity Life Ins. Co., 814 F.2d 1127 (7th Cir. 1987). The Supreme Court denied the petition for a writ of certiorari.

http://www.sec.gov/news/speech/2008/spch121708tap.htm
Home | Previous Page
Modified: 12/17/2008

Traditional Fixed Interest Rate Annuities

2008-12-13T08:04:00.001-08:00

American Equity - Products for Today - Fixed Rate Annuities
Traditional Fixed Interest Rate Annuities
A traditional fixed annuity is a contract between you and American Equity. Your annuity earns a competitive interest rate, which is declared by the board of directors at American Equity and is guaranteed for a specified period of time. It also contains a guaranteed minimum interest over the term of the contract. Taxes are not due on earnings until withdrawn.

The benefits and features of American Equity�s traditional fixed annuities include:

* Tax-Deferred Growth.
* Competitive current and renewal interest rates.
* First year additional interest rate bonuses or Multi-Year Guaranteed Interest Rates.
* Single or Flexible Premium.
* No up front sales charges or fees.
* Systematic Withdrawals of interest or amounts to satisfy IRS minimum distributions available immediately.**
* 10% penalty-free withdrawals starting in year 2.
* Additional liquidity if you are confined to a nursing home or diagnosed with a terminal illness (available by state approval).
* Company Surrender Charges may apply for early withdrawal.
* Surrender Charges are waived at death.

** Benefit not guaranteed and subject to change.

Features and benefits may vary by contract form and state. Please review the contract or product disclosure for more information.

Annuities are products of the insurance industry and are not guaranteed by any bank or insured by the FDIC.

What Is Triple Compounding?

2008-12-13T07:38:00.001-08:00

American Equity - Tax Deferral
Triple Compounding Solutions!

One of the primary advantages of deferred annuities is the opportunity to accumulate a substantial sum of money by allowing your premium and interest to grow tax-deferred. Interest earned on your American Equity annuity is not currently taxable by the federal or state government until you choose to make a withdrawal. This is the key difference between an annuity and other taxable financial vehicles. A 5% return may sound good initially, but if you are in a taxable vehicle with a combined 27% tax bracket, the actual return is 3.65%. Combine this with an average inflation rate of 4%, and what have you truly gained? That�s right... nothing!

Taxable vs. Tax-Deferred

With that in mind, consider the many advantages of an annuity, including triple compounding! With annuities you earn interest on your principal, interest on your interest, and interest on what you would normally pay in taxes. You will not pay income taxes on annuity interest until you withdraw it from your annuity. You control when you pay income taxes!

Deferred Annuity

SEC Ignores Congressional, State, and Industry Opposition to Indexed Annuity Proposal

2008-12-12T09:15:00.001-08:00

SEC Ignores Congressional, State, and Industry Opposition to Indexed Annuity Proposal
SEC Ignores Congressional, State, and Industry Opposition to Indexed Annuity Proposal

Last update: 11:09 a.m. EST Dec. 12, 2008
WASHINGTON, Dec 12, 2008 /PRNewswire via COMTEX/ -- The Coalition for Indexed Products issued a statement expressing "deep disappointment" in the Security and Exchange Commission's decision to pursue Proposed Rule 151A, which would require all indexed annuities to be registered as securities. The SEC announced yesterday that the proposal would be an agenda item on the Commission's December 17 meeting.
A letter signed by 19 members of Congress -- including several on the House Financial Services Committee -- was recently sent to SEC Commissioners expressing opposition to the proposed rule, according to the Coalition. It noted that Proposed Rule 151A would "reduce product availability and consumer choice" and "effectively [place] the cost of the regulation squarely on the shoulders of consumers."
Other high profile opponents include the National Association of Insurance Commissioners, the National Conference of Insurance Legislators, and a number of Congressional members who wrote separate letters to the SEC.
"The SEC's action appears to ignore the thousands of comments filed against this misguided proposal," said Jim Poolman, spokesperson for the Coalition and former North Dakota Insurance Commissioner.
"It is concerning that the SEC continues to see this issue as a priority in the middle of arguably the most severe financial crisis since World War II," Mr. Poolman added. "The Commission seems content to eliminate millions in market capital from the insurance industry, based on highly questionable suppositions."
SOURCE The Coalition for Indexed Products

Annuity
Annuity Rate
Annuity Guide
Index Annuities
Deferred Annuity

Fixed Indexed Universal Life Insurance

2008-12-12T07:10:00.001-08:00

Sagicor Life Introduces New Fixed Indexed Universal Life Product - 12/10/2008 - insurancenewsnet.com
Tampa, FL - December 9, 2008 – Sagicor Life Insurance Company is pleased to introduce its Platinum Series Fixed Indexed Universal Life product Which is now available in the following states: AL, AR, CO, DC, DE, GA, FL, HI, ID, IN, KS, MD, MO, NC, NE, NV, OK, RI, SC, and WA. More state approvals are soon.

The Platinum Series Fixed Indexed Universal Life product is ideal for family income protection, college savings, wealth building, retirement savings, estate planning, wealth transfer, charitable giving, business continuation, buy/sell plans, executive bonus plans, deferred compensation plans and more. The Fixed Indexed Universal Life is part of a growing portfolio of life and annuity products offered by Sagicor Life.

A key highlight of the Fixed Indexed Universal Life product is it provides immediate death benefit protection along with three distinct crediting strategies offering the potential for significant cash value growth on a taxed-deferred basis with no market risk. The available crediting strategies include a one-year Declared Rate Strategy, a one-year point-to-point strategy linked to the S&P 500® Index and a three-year point-to-point strategy based on a basket of indices made up of the Russell® 2000, the Dow Jones EURO STOXX 50® Index and the Hang Seng Index.

Other features include the Accelerated Benefit Insurance Rider which includes Terminal Illness and Chronic Illness Living Benefits*, penalty-free withdrawals, policy loans after the first year** and preferred loans available after the policy has been in force for ten years. Available optional riders include the Primary Insured Term Rider, Waiver of Monthly Deductions Rider, Additional Insured Term Rider, Children’s Term Rider, and Accidental Death Benefit Rider. Policy and Riders are not available in all states and state variations apply. For more information visit www.SagicorLifeUSA.com or contact our Sales Department at salesdept@sagicorlifeusa.com or call 800-406-9900.

About Sagicor Life Insurance Company

Sagicor Life Insurance Company is a full-service life insurance company offering a wide range of competitive products consisting of term, whole life, indexed life and annuities. Licensed in 44 states and the District of Columbia, Sagicor Life is a wholly-owned subsidiary of Sagicor Financial Corporation, one of the oldest insurance groups in the Americas, with operations in 22 countries including the United States, United Kingdom, Latin America and the Caribbean. Sagicor Life is committed to offering our agents and customers world-class service with integrity and value.

* Not available in all states.
** In Indiana, loans can be taken in the first year.

MEDIA CONTACT:

Anabel S. Thomas
Sagicor Life Insurance Company
Phone: (813) 287-1602 ext. 6207
Fax: (813) 287-7420
anabel_thomas@sagicor.com

Index Annuity
Equity Index
Index Annuity Rate

Fixed Rate Annuities can’t be seen as asset in determining nursing home assistance.

2008-12-08T13:49:00.001-08:00

Annuity ruling sets standard | Wilkes-Barre News | The Times Leader
Annuity ruling sets standard
Recent decision reaffirms other rulings that annuity can’t be seen as asset in determining nursing home assistance.

By Terrie Morgan-Besecker tmorgan@timesleader.com
Law & Order Reporter

In a precedent-setting ruling, a federal appellate court has said the state Department of Public Welfare cannot consider a $250,000 annuity a Wilkes-Barre woman purchased following her husband’s entry into a nursing home as an asset when determining whether he was eligible for Medicaid benefits.

The ruling by the Third Circuit Court of Appeals is the latest in a series of court cases brought by welfare officials in Pennsylvania and other states. The cases challenge a loophole in the Medicaid law that officials say has allowed affluent couples to use annuities to shelter assets that otherwise would be available to pay for an institutionalized spouse’s care.

The decision, issued last month in the case of Josephine James, is significant because it reaffirms prior court rulings, said James’s attorney, Matthew Parker of Williamsport. It will affect all residents in the states covered by the Third Circuit – New Jersey, Pennsylvania and Delaware.

But Jason Manne, chief deputy counsel for DPW, said the court’s ruling is fact-specific to the James case. Even though the department lost, Manne contends the legal reasoning the court employed will help DPW challenge the use of annuities in calculating Medicaid benefits.

The ruling is being closely monitored by attorneys on both sides of the issue as the stakes are huge. The average annual cost of nursing home care for one person is $60,000, according to DPW. Last year, Pennsylvania’s Medicaid fund paid out more than $3 billion to nursing homes.

While providing health care coverage to all persons is a laudable goal, DPW says, it has an obligation to ensure that Medicaid is utilized for those who truly need it.

“This does not involve poor people or people of modest means,” Manne said. “The problem is you have individuals who have hundreds and hundreds of thousands of dollars, sometimes even millions, who, rather than use their money for their nursing home care, want the taxpayers to pay for that care.”
A legal loophole

But Parker and other elder-law attorneys say couples such as the Jameses are simply availing themselves of all options to ensure the non-institutionalized spouse is left with sufficient income to support him or herself.

They note that amendments to the law that went into effect in 2006 now require DPW be listed as a lien holder on annuities in which a person or the person’s spouse is receiving Medicaid benefits. That does not affect Josephine James, whose case started in 2005. For all subsequent cases, it allows DPW to recoup all money spent on caring for the institutionalized spouse from the estate of the non-institutionalized spouse after their death.

They also note that regulations are in place to ensure the process is not abused. Welfare officials, they say, are trying to use the courts to circumvent a law they don’t like.

“If in fact there are any alleged loopholes, they were created by Congress. It is not for DPW ... to determine what public policy is when Congress has spoken,” said attorney Shirley Berger Whitenack of New Jersey, a member of the National Academy of Elder Law Attorneys. “If DPW doesn’t like it, they can certainly lobby Congress” to change the law.

The key issue focuses on the structure of an annuity – a contractual agreement in which the buyer gives the seller, typically an insurance company or bank, a lump sum of money. The company or bank then pays the purchaser a consistent monthly amount, or an “income stream,” over a given period of time.

In determining whether an institutionalized spouse will qualify for Medicaid assistance, states consider a married couple’s assets – including cash, stocks, bonds and property. The law prohibits the state from considering the income of the non-institutionalized spouse – known as the community spouse – in that calculation.

The community spouse is afforded a percentage of the assets to live on. Any excess is deemed an “available asset” that can be used to pay nursing home costs. Medicaid kicks in once that money has been exhausted.

The key benefit of an annuity is that it allows couples to convert joint assets that otherwise would be deemed available into an “income stream” for the community spouse. Because that money is now considered to be the income of the community spouse – not an asset – it cannot be counted when determining the institutionalized spouse’s Medicaid eligibility.
How it worked

In the James case, Robert James, now deceased, was admitted to a Wilkes-Barre nursing home on Aug. 10, 2005. At that time, he and his wife had total assets of $381,443, of which roughly $278,000 was deemed “available assets” that could be used to pay for Robert’s care.

In order to qualify Robert for Medicaid, Josephine James purchased a $250,000 annuity on Sept. 12, 2005 – about a month after her husband entered the home. She also spent about $28,000 on a new car, leaving no available assets to pay for her husband’s care under Medicaid rules.

Robert James then applied for Medicaid benefits, but was denied by DPW.

The department did not allege Josephine James did anything improper when she converted the couple’s assets into an annuity for herself or when she purchased the car, both of which are allowed under the rules.

Rather, it argued the annuity was an asset because Josephine James could, if she chose, sell the “income stream” it generated to a firm such as J.G. Wentworth, a company that purchases annuities and other types of structured payments for a lump sum.

The Jameses’ filed a federal court action that challenged the department’s interpretation. A federal judge ruled in their favor, saying nothing within the Medicaid Act says DPW can force a person to sell an annuity to a second party.

DPW appealed to the Third Circuit, which also sided with the Jameses.
More tests ahead

In its ruling, the court said Medicaid rules state that an asset can only be deemed “available” if the owner has the ability to liquidate it without incurring legal liability.

In the James case, her annuity was non-transferable and non-revocable, meaning she could not access the principal and could not sell it. If she did, she would be breaking the contract, subjecting her to legal liability. The court said it therefore could not be considered an asset.

While the ruling benefits James, Manne said it will not benefit persons who purchase annuities today because Pennsylvania in 2005 amended its law to forbid sellers of annuities from including a clause that makes them non-transferable. That would allow annuities to be sold without legal liability, he said, and allow the state to consider them an asset.

Manne acknowledged that others have interpreted the Third Circuit’s decision differently. There are also other complex legal issues that still must be resolved, he said.

Given that, the true significance of the ruling won’t be known until other courts apply the decision to pending cases that raise issues similar to the James case, he said.

Terrie Morgan-Besecker, a Times Leader staff writer, may be reached at 570-829-7179.

Variable - Insurers Abandon Rosy View of Variable Annuities

2008-12-02T09:06:00.001-08:00

Insurers Abandon Rosy View of Variable Annuities at SmartMoney.com
Insurers Abandon Rosy View of Variable Annuities

For the last few years, insurance companies have been luring investors with an irresistible product: an investment that guaranteed market gains, with no risk, and generous income payments for life. Surprise of surprises, that pitch has worked, reviving the lackluster variable annuity and attracting about $140 billion a year in investor assets.

But the guarantees on these variable annuities sounded too good to be true, and a few months ago SmartMoney asked insurance company executives to explain how, exactly, they planned to keep them.

As it turns out, it’s not so easy. A variable annuity is basically an investment portfolio with an insurance overlay – investors got tax-deferral and, usually, a death benefit, but paid high fees and big withdrawal penalties. But in the last few years, insurance companies have started marketing the investments as safe havens for people in retirement or close to it: a typical product lets investors stay in the market, but promises a lifetime income stream based on an account value that can only go up, often by as much as 7% per year. That means investors’ potential income rises regardless of what happens in the market.

How’s that possible? Apparently, it’s not. When we asked earlier this year, the insurance companies told us they had it all under control, guaranteeing the benefits with sophisticated models and elaborate hedging strategies that would hold up even in a severe market downturn. But now that we’ve had that severe downturn, several companies have stopped selling their most generous variable annuities or raised fees, citing “prudence in light of current market conditions” – code for “we didn’t expect this.”

MassMutual has stopped selling an annuity that guaranteed a 6% annual return; AXA-Equitable has taken a product with a 6.5% guarantee off the shelf and raised the prices on its existing product; other companies are doing the same. “In today’s market, a 6.5% guarantee just is not prudent,” said Steve Mabry, senior vice president of product development at AXA-Equitable.

In theory, investors who already own one of these annuities are still entitled to the benefits for as long as they hold their contracts. And lucky them: in today’s markets, a 6.5% annual return looks downright spectacular. The problem is, the guarantees are still only as good as the companies that insure them. And this most recent move – discontinuing products, raising fees – acknowledges that the companies’ models and hedging strategies aren’t as stable as they thought. The financial crisis has hurt insurance companies across the board -- AIG has already received federal bailout funds; the Hartford has taken steps to apply for them – and the question policyholders need to ask is, “Will my company be around in four or five years, when I want to exercise that benefit,” says John McCarthy, vice president at Advance Sales, an annuity research company.

There are backstops in place, of course, but if companies go out of business, it won’t look good for investors. “You may be able to collect your account value,” said McCarthy. “But you’ve paid for a guarantee that you’ll never get.” The insurance companies say that won’t happen. They point to the rules and regulations that require them to keep a certain amount of money in reserve. Also, most states require insurers to guarantee at least $100,000 in annuity benefits, but it’s not clear whether these variable annuity benefits qualify. “They might be covered today, and they might not be, and that might not mean anything five or 10 years from now,” says Mike Surguine, the executive director of the Arizona Life and Disability Guaranty Fund. “The laws could change.” And, says AXA’s Mabry, the company discontinued its most generous guarantee precisely to insure the financial health of the parent company.

But some companies are showing no sign of retreat, at least not yet. Prudential is still selling its most generous annuity, which guarantees a 7% annual rate of return under any market conditions. It’s not cheap – the all-in cost for an annuity with the guarantee is well over 3% per year – but in this market, it’s selling like crazy: In the third quarter of 2008, 75% of Prudential annuities carried the benefit. The company says it has no plans to raise its prices or reduce the benefit, and says it’s confident it can handle these commitments. In any case it’s a big guarantee – as long as they’re around to keep it.

SEC to hear more on fixed index annuity regulation

2008-10-13T14:10:00.001-07:00

SEC to hear more on index annuity regulation - InvestmentNews
By Darla Mercado
October 13, 2008, 3:47 PM EST

The Securities and Exchange Commission has reopened the comment period for its proposed rule on federal regulation of index annuities.

The Washington-based regulator made the announcement on Friday, giving the public thirty days from the publication of the extension in the Federal Register.

The rule, known as 151 A, would define the terms “annuity contract” and “optional annuity contract” under the Securities Act of 1933, clarifying index annuities’ status under the federal securities laws.

Were the rule to be approved, the products would come under the jurisdiction of the SEC and the Financial Industry Regulatory Authority Inc. of New York and Washington.

Comments may be submitted here.

Annuity Definition
Annuity Buyer's Guide
Fixed Annuity info

Fixed Index Annuities

2008-10-11T07:13:00.001-07:00

AMEB,AEL American Equity: Year-to-Date Annuity Sales Up 6% From Year Ago
American Equity: Year-to-Date Annuity Sales Up 6% From Year Ago

WEST DES MOINES, Iowa, Oct 07, 2008 (A. M. Best via COMTEX) -- AEL | Quote | Chart | News | PowerRating -- American Equity Investment Life Holding Co., a top seller of equity-indexed annuities in the United States, said year-to-date annuity sales rose 6% from the same period a year ago.

Ahead of releasing its third-quarter earnings next month, American Equity (NYSE: AEL | Quote | Chart | News | PowerRating) on Oct. 3 said annuity sales for the quarter totaled $571.8 million, bringing year-to-date sales to $1.7 billion for the first nine months of this year, up from $1.6 billion in the same period in 2007.

At the end of trading Oct. 6, American Equity Investment Life led the A.M. Best Global Insurance Composite Index -- up 17.93% from the previous close. The A.M. Best Global Index closed at 859.99 -- down 6.72%.

The West Des Moines, Iowa-based company will release third-quarter earnings Nov. 5 after the market closes. For year-end 2007, American Equity's net income declined 61.6% to $29 million, while total revenues dropped to $915.9 million, a decrease of 22%.

Debate surrounds indexed annuities. Back in June, the U.S. Securities and Exchange Commission proposed a rule, 151A, that would define certain indexed annuities as securities products. Under the rule, these annuities ? currently regulated as insurance products ? would be treated as securities if amounts payable by the insurer are more likely than not to exceed amounts guaranteed under the contract.

Insurance carriers would need to refile the products with the SEC and offer them via a prospectus. Agents who wish to continue selling them would need to become registered representatives overseen by the Financial Industry Regulatory Authority, a status held by only about 55% of those who currently sell the products (BestWire, Sept. 8, 2008).

The comment period for the SEC's proposal ended Sept. 10. As of that day, 2,400 comments were sent to the SEC and about 90% were in opposition, American Equity said. The SEC has continued to accept comments received after the deadline, it said.

American Equity said it co-hosted a Congressional "fly-in" in Washington, D.C., on Sept. 23 in which the Coalition for Indexed Products, made up nine companies and a group of national marketing organizations representing the coalition, met with nearly 80 members of Congress. They urged members to tell the SEC the measure isn't needed because indexed annuity sales "are already heavily regulated by state insurance departments and would restrict consumer choice at a time when access to principal-protected products like fixed-index annuities should be carefully guarded," American Equity said.

The SEC, which adopted the proposed rule unanimously, has pointed to allegations of abuses in the marketing of indexed annuities to seniors, and has sought supervision by the Financial Industry Regulatory Authority of those who sell the products. According to the SEC, among complaints made to state securities regulators, cases involving annuities represented 65% of the caseload in Massachusetts, and 60% of the caseload in Hawaii and Mississippi (BestWire, July 28, 2008).

(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)

Annuity Index Annuity Fixed Annuity

Immediate Annuities - Women's financial security in retirement

2008-10-11T07:00:00.001-07:00

Advice for men and women about women's financial security in retirement - The Boston Globe

I've thought about dying before my wife Georgina after reading two recent studies on women and retirement.

"Compared with men, women will likely have lower retirement savings yet they'll need to make those savings last longer and plan on being on their own at some point," concludes "Why Women Worry," part of ongoing research on retirement issues by the financial firm The Hartford and MIT's AgeLab.

On average, a woman, 65, can expect to live to 85, about three years longer than men, and has a 23 percent chance of living past 95, based on mortality tables.

"When a woman outlives her husband, her income decreases by 50 percent on average yet expenses only decrease by 20 percent," the study said.

The second study, "Lifetime Income for Women: A Financial Economist's Perspective," was authored by David Babbel, a professor at the Wharton School of Business, and cosponsored by New York Life Insurance Co.

Babbel argues women should allocate substantially less money to stocks and stock mutual funds in retirement and more to immediate annuities that guarantee an income for life in return for a lump-sum premium.

"Annuities are even more important for women because their risks are compounded by longer life expectancy as well as potentially outliving husbands by six years or more (wives tend to be younger than their husbands)," said Babbel. He concludes that income annuities from top-rated insurance companies can provide secure lifetime income for 25 to 40 percent less money than it would take an individual.

That's because insurance companies base their payouts on average life expectancies (premiums from those who die early subsidize payments to those who live longer). When we invest on our own, we must plan for our money to last several years beyond life expectancy, just in case.

For this reason, financial planners often recommend retirees withdraw no more than 4 percent of savings the first year of retirement, increasing the amount by 3 percent a year to counteract inflation.

But, several top-rated insurance companies offer lifetime annuities with payout rates of 5 percent or more the first year for a 65-year-old couple, raising the amount 3 percent a year and with a "refund" feature (if both spouses die before income payments equal the premium, a beneficiary gets the difference).

But with income annuities, we typically give up our principal and can't access it beyond the scheduled income payments. Some contracts allow exceptions at the cost of lowering income.

In all states, guaranty associations belonging to the National Organization of Life and Health Guaranty Associations back income annuity obligations up to a limit ($100,000 or more per company depending on the state) per policyholder if an insurance company goes bankrupt.

Humberto Cruz is a syndicated columnist. He can be reached at askhumberto@aol.com.

Fixed Annuity

Index Annuity

Annuity Information

Life Insurance - Caution About The Lowest Rates!

2008-10-05T15:38:00.000-07:00
Distinguish Where You Fit Before You Pre-Apply!

Please read this section before you apply for insurance expecting a particular rate. Almost all companies have a super preferred, preferred, and standard rate. Although the requirements for super preferred are similar for the term companies with the lowest rates, Our agency knows these differences and would like to put you with the one with the lowest rate but also the more feasible. Some companies only have 10-15% of their applicants come back with the super preferred. Others are less strict and that percentage is closer to 50%. The following are some general guidelines for super preferred: (unisex)

Height
Weight

•Each company is slightly different, and most allow 5lbs leeway.
•No tobacco usage last 2 years.
•Cholesterol 180-220 (A couple of our companies will go as high as 230 to 250).
•Blood Pressure 140/90 (untreated).
•Family history (No deaths before age 60, siblings or parents) (sometimes one allowed) of cancer or cardiovascular disease.
•Aviation-No super preferred.
•Avocation (hazardous) -No super preferred.
•Driving- No more than 3 moving violations in last 2 years.
•Travel- No extensive travel to underdeveloped or politically unstable countries.
•If one or more of these variables are out of the guidelines, it can move you from super preferred to preferred. Even if moved to preferred these are still very competitive rates and only 5% to 10 % higher. Again, the preferred rates vary between companies so it is important to try to find which company will consider you preferred. That's where we can help! The requirements vary between companies but here are some general preferred guidelines:

•Height and weight is the same as super preferred but with more leeway sometimes up to 20-25 pounds.
•Cholesterol 250 to 280.
•Blood pressure 150/90 (treated or untreated).
•Family history cannot have both parents or one parent and one sibling die before age 60 of cancer or cardiovascular disease.
•Aviation-Sometimes depending on situation.
•Avocation-Sometimes depending on how hazardous.
•Driving- Same as super preferred.
•Travel- Similar to super preferred but not as strict.
•These are general guidelines and will vary more from company to company than the requirements for super preferred.
•If after seeing your quote, you would like to discuss this with our office by e-mail, phone or fax, our office will be glad to advise. Click here.

Other factors that may or may not exclude someone from preferred are:

•Current or history of alcohol/drug abuse.
•Rheumatoid arthritis.
•Asthma (current treatment).
•Personal history of cancer or cardiovascular disease.
•COPD
•Crohn's disease.
•Current treatment for depression.
•Diabetes (oral diabetics can get standard rates, others can get a slightly higher premium.
•Epilepsy
•Kidney/liver disease
•Mental illness

What if an instant quote is not right for me because of my special medical history?

2008-10-02T15:36:00.000-07:00
Using the same diligence we use to find the lowest preferred rates for our customers, we will prepare a custom quote. Of course we need to know the medical condition, its duration, treatment and prognosis.

Can I apply at my age?

Our agency works with individuals 18 to 85! A few companies provide policies to age 85 for term, second to die or Disclaimer insurance. Occasionally Disclaimer is available past 85.

FDIC May Need $150 Billion Bailout as More Banks Fail

2008-10-01T16:44:00.001-07:00

FDIC May Need $150 Billion Bailout as More Banks Fail (Update3)

By David Evans
More Photos/Details

Sept. 25 (Bloomberg) -- Deborah Horn tugs on the handle of the glass-paned entrance of the IndyMac Bancorp Inc. branch in Manhattan Beach, California. The door won't budge. The weekend is approaching, and Horn, 44, the sole breadwinner in a family of three, needs cash.

A small notice taped to the window on this Friday afternoon in mid-July tells her why she's been locked out. IndyMac has failed, the single-spaced, letter-sized paper says; the bank is now in the hands of the Federal Deposit Insurance Corp.

``The Receiver is now taking possession of the Bank,'' the sign says.

``I'm physically shaking,'' says Horn, an academic tutor, as she peers into the bank. Inside, an FDIC examiner is talking to six stone-faced IndyMac employees. ``I don't know when I'm going to be able to get my money,'' Horn says. ``I'm a single mom. This is the money I live on.''

Don't worry about Horn. She'll be all right, as will most of Pasadena, California-based IndyMac's 200,000-plus customers.

That's because the FDIC, created in 1934, insures all accounts up to $100,000 at its member banks, and it has never failed to honor a claim. The people to worry about are U.S. taxpayers.

The IndyMac debacle is taking a large bite out of FDIC reserves, and if scores of other banks fail in the year ahead, the fund will be depleted. Taxpayers will have to step in.

Worst Wave

Americans had gotten used to the idea that bank failures were as rare as a category five hurricane. No banks went bust in 2005 or 2006. Seven collapsed in 2007 as the credit crisis began to exact a toll. So far in 2008, 12 more, with total assets of $42 billion, have fallen -- that's the worst wave of bank failures since 1992.

IndyMac, which had $32 billion in assets when it went into receivership, is the most expensive bank failure the FDIC has ever covered. And that record may not stand for long.

By the end of 2009, about 100 U.S. banks with collective assets of more than $800 billion will fail, predicts Christopher Whalen, managing director of Institutional Risk Analytics, a Torrance, California-based firm that sells its analysis of FDIC data to investors.

``It's not going to be Armageddon,'' says Mark Vaughan, a financial economist at the Federal Reserve Bank of Richmond, Virginia and a senior lecturer in economics at Washington University in St. Louis. ``But it's going to be bad.''

FDIC's Secret List

The FDIC knows which banks are at risk; it has a watch list with 117 institutions. The agency won't disclose their names because doing so could cause depositors to panic and pull out all of their funds.

It won't take many more failures before the FDIC itself runs out of money. The agency had $45.2 billion in its coffers as of June 30, far short of the $200 billion Whalen says it will need to pay claims by the end of next year. The U.S. Treasury will almost certainly come to the rescue by lending money to the FDIC.

Regardless of who wins control of the White House and Congress in November, no politician is likely to vote in favor of leaving federally insured depositors out in the cold.

A taxpayer bailout of the FDIC would come on the heels of intervention by the U.S. Treasury Department and Federal Reserve to save investment bank Bear Stearns Cos., mortgage giants Fannie Mae and Freddie Mac and the world's largest insurer, American International Group Inc.

Uninsured Deposits

Emergency federal lending to the FDIC could swell the cost of government rescues of failed financial institutions to more than $400 billion -- not including the $700 billion general Wall Street bailout now under discussion in Congress. Under federal statute, the FDIC must pay back any loans from the Treasury.

That number would be even higher if the government were on the hook for uninsured deposits -- which amount to $2.6 trillion, 37 percent of the total of $7 trillion held in the U.S. branches of all FDIC member banks.

The subprime crisis -- which started in the suburbs of California and Florida and migrated through the alchemy of securitization to Wall Street investment banks -- has come almost full circle, spreading its toxins to the very lenders who first extended those teaser-rate, no-document mortgages to homeowners.

In 2006, IndyMac was the largest provider of mortgages that didn't require borrowers to provide proof of their incomes. And as of mid-September, investors were worried that Washington Mutual Inc., the biggest thrift in the U.S., would be the next bank to go belly up.

A federal takeover of Washington Mutual, which has assets of $310 billion, could cost taxpayers $24 billion more, according to Richard Bove, an analyst at Miami-based Ladenburg Thalmann & Co.

Slower To Hit

The reckoning that has run through Wall Street, claiming investment banks Lehman Brothers Holdings Inc. and Bear Stearns among its victims, has been slower to hit Main Street. In mid- 2007, Wall Street firms began disclosing losses on their packages of securitized home loans.

From August 2007 to September 2008, banks worldwide wrote down more than $500 billion. Regional banks, by contrast, have waited to write off their bad mortgages, hoping the housing market would improve and defaults would level off. Instead, they've risen.

FDIC-insured banks charged off $26.4 billion of bad loans in the second quarter of 2008, the most since 1991.

U.S. lenders, in their embrace of subprime lending, committed the same analytical fallacy as their Wall Street counterparts. When it came to assessing risk, they relied on the recent past to predict the near future.

Living in the Past

They were blinded by years of rising home prices and low mortgage default rates.

The FDIC fell into the same trap. As recently as March, an internal FDIC memo estimated the cost to cover bank collapses in 2008 would be just $1 billion, dropping to $450 million in 2009. It wasn't even close.

The IndyMac failure alone, which happened four months after that memo was circulated, will cost the FDIC $8.9 billion -- and the bill for all 12 collapses will be about $11 billion, the FDIC says.

FDIC Chairman Sheila Bair says the agency's forecast was based on models using data from the past 20 years, which included long periods with few bank failures.

``Given the change in economic conditions, we need to weight the more recent data more heavily,'' Bair says. ``You also need a good dose of common sense.''

Bair says depositors shouldn't fret about their banks. ``We do have a handful with some significant challenges,'' she says. ``Overall, banks are quite safe and sound.''

Bair is duty bound to say that, says Joseph Mason, an economist who worked for the Treasury from 1995 to 1998. Part of the FDIC's job is to reassure the public and prevent runs on banks. Mason says Bair's rhetoric masks the agency's inability to grasp the scope of the coming crisis.

`Ignoring the Problem'

``The FDIC and the banking regulators are ignoring the problems, hoping they'll go away,'' he says. ``They won't.''

The quake that shook markets in September may make the FDIC's task more complicated and expensive. With investment banks in eclipse, deposit-taking institutions will now play a larger role in financing the economy.

Earlier this month, Bank of America Corp. agreed to buy Merrill Lynch & Co. for $50 billion, and Wachovia Corp. and Morgan Stanley were in talks about a potential merger.

'Would Be Miraculous'

From 2002 to 2007, U.S. lenders made a total of $2.5 trillion in subprime mortgages, according to the newsletter Inside Mortgage Finance. ``Given the magnitude of the bad loans still on bank balance sheets, it would be miraculous for the FDIC to squeak by with losses of less than $200 billion,'' Whalen says.

On Sept. 18, in yet another stunning turn of events, Paulson proposed a plan that would cost the government, if not necessarily the FDIC, hundreds of billions of dollars more.

The Treasury secretary says the government will purchase toxic mortgage debt from banks in an effort to cleanse the financial system. In an unprecedented move, the Treasury also pledged $50 billion to insure nonbank money market funds.

Bair says Paulson's plan won't reduce the number of banks on the FDIC's watch list.

One reason the rolling financial crisis is hitting regional banks later than it walloped Wall Street is because the very system that is meant to protect depositors -- federal insurance -- has also served to prop up weak lenders. So has the ready supply of credit extended to banks by another government-chartered group, the Federal Home Loan Banks.

Because all deposits up to $100,000 are insured, most savers can be agnostic about where they put their money. They don't have to know -- or care -- whether a bank is making sound or foolish loans.

Unlike buyers of stocks or bonds, people who put their money in banks rarely do research about the soundness of the institution. That makes it easy for banks -- both prudent and reckless ones -- to raise cash.

Brokered Deposits Loophole

Banks have taken the FDIC's protection and run with it, thanks to the phenomenon of brokered deposits -- and a giant loophole in federal regulations.

As of June 30, Whalen says banks held $644 billion from brokers who offer customers a way to gain FDIC insurance for multiple accounts.

Promontory Interfinancial Network LLC, an Arlington, Virginia-based company founded in 2002 by former federal officials --including some from the FDIC itself -- has figured out how to help wealthy clients insure as much as $50 million each by putting their money into separate accounts at 500 different banks.

While the law does limit insurance to $100,000 per account, it places no ceiling on the number of different banks where an individual can hold accounts -- a loophole Congress failed to close even after the savings and loan debacle of 1984-1992.

Missing Discipline

Bair says brokered deposits can provide quick cash but also create potential danger.

``It is quite easy to get brokered deposits, and there's not a lot of market discipline with the brokered deposits,'' she says. ``When there's excessive reliance on them, particularly to fuel rapid growth on the balance sheet, that's definitely a high-risk factor.''

The other big source of money for banks is the FHLB, an under-the-radar network of 12 regional banks created by Congress in 1932 to help lenders finance mortgages. Lenders had borrowed a total of $840.6 billion from the FHLB system as of June 30, up 38 percent from $608 billion in the same period a year earlier.

Treasury Secretary Henry Paulson, in a little-noticed action on Sept. 7, the day after he announced the bailout of Fannie and Freddie, extended a secured credit line to the FHLB to provide an emergency source of funding if needed.

FHLB Advances

Vaughan says credit from the FHLB is keeping some sick banks afloat and postponing the inevitable.

`What's going to happen,'' he says, ``is that weak banks will use FHLB advances to avoid discipline from funding markets. In some cases, that will keep their doors open longer than they otherwise would, all-the-while offloading more and more potential losses onto the FDIC and taxpayers.''

Normally, the FDIC is no more than four initials customers see when they walk into their banks. In recent years, the agency hasn't had to close many banks, as it collected small amounts of insurance premium payments.

President Franklin D. Roosevelt signed the law creating the FDIC in the middle of the Depression. As part of the New Deal, Congress created a system of federal insurance to end bank runs by reassuring the public that depositing money in banks was safe. All banks paid the same rate for insurance.

Wave of Failures

The FDIC shares regulatory authority with other agencies. The Office of Thrift Supervision oversees federally chartered savings and loans, the Comptroller of the Currency monitors national banks, and state banking regulators review state- chartered banks.

The FDIC is the only one of these agencies that insures deposits.

By and large, the government's insurance system worked until the 1980s, when thrifts went on a commercial real estate lending binge, triggering a wave of failures and consolidation that lasted from 1984 to 1992.

In 1991, Congress changed the way FDIC premiums were assessed, requiring banks to pay rates based on how well capitalized they were for the risks they faced. As bank failures subsided to less than a dozen a year by 1995, the FDIC's reserves began to swell.

As a result, the agency cut to zero the premiums it charged to the 90 percent of the banks deemed safest. That free ride continued for 10 years.

`No Good Way'

In 2006, Congress increased insurance payments for most banks, averaging $5-$7 per $10,000 of deposits.

The insurance premiums imposed by the FDIC on the riskiest banks -- running as high as $43 per $10,000 -- are still far below the rates private insurers would charge, says Sherrill Shaffer, former chief economist of the Federal Reserve Bank of New York.

At the same time, charging struggling banks a fair price for insurance premiums may drive them into insolvency, he says.

``That can be destabilizing,'' says Shaffer, who's now a professor of banking at the University of Wyoming in Laramie. ``There's really no good way around that. It's an issue that policy makers and analysts have wrestled with for decades.''

Bair says the FDIC is gearing up for the coming wave of bank failures. She says she's developing a plan to raise insurance premiums.

The agency's Division of Resolutions and Receiverships has boosted authorized staffing levels by 48 percent, to 331, this year. It has hired 178 new financial specialists and called up 65 retirees for temporary service under a special program.

Bair vs. Enron

Bair, 54, an attorney who graduated from the University of Kansas School of Law, has challenged financial institutions as a regulator for more than a decade. President George W. Bush nominated her as chairman, and she was sworn in on June 26, 2006.

She replaced Donald Powell, a former Texas banker. In 1992, as a member of the Commodity Futures Trading Commission, Bair cast the lone vote against Enron Corp.'s effort to exempt certain energy contracts from the agency's anti-fraud and anti- market manipulation enforcement powers.

Nine years later, Enron blew up in one of the biggest financial scandals in U.S. history.

As assistant secretary of the Treasury for financial institutions in 2002, Bair criticized abusive subprime mortgage brokers.

``Lenders have made loans with little or no regard for a borrower's ability to repay and have engaged in multiple refinance transactions that result in little or no benefit to a borrower,'' she told the Pittsburgh Community Reinvestment Group on March 18, 2002.

`Rock and Brock'

Bair has published two children's books. One of them, ``Rock, Brock, and the Savings Shock'' (Albert Whitman, 2006) is a tale of two twins -- Rock the Saver and Brock the Spender

To contact the reporter on this story: David Evans in Los Angeles at davidevans@bloomberg.net
Last Updated: September 25, 2008 19:54 EDT

Fixed Annuity Definition

Do insurance companies treat all tobacco users the same?

2008-09-28T08:00:00.000-07:00
Do insurance companies treat all tobacco users the same?

Cigarette smokers that smoke less than a pack a day have a chance to get a non smoker rate with one company. Other companies treat pipe smokers, chewers, and cigar smokers as non smokers. Still another company gives almost all tobacco users a non smoker rate for the first 3-4 years! This same company gives a preferred rate if you use tobacco less than three to four times a year. They look at the amount of nicotine in your system.

Life Insurance - What if I don’t fit into any of these categories?

2008-09-24T15:29:00.000-07:00
What if I don’t fit into any of these categories?

If an individual has one or more of these risk factors, they may still qualify for preferred or standard. If even standard is out of the question, there are some highly rated companies that will still take the risk. Insurance companies fear the unknown. If they can identify what those risk factors are, there is a greater chance they will offer a policy. For example, someone just finds out he has a blood pressure problem and his doctor is trying different medications to bring it under control. Until the blood pressure is under control, this remains an unknown to the insurance company. Once under control it could be a preferred with some companies, standard to others.

Failures of SEC Chairman Cox

2008-09-21T11:37:00.001-07:00

5 Failures of SEC Chairman Cox - Seeking Alpha
5 Failures of SEC Chairman Cox
by: Mark Sunshine

Almost all paths of incompetence in the current crisis run through the office of the Chairman of the SEC, Chris Cox. McCain’s solution to fire Cox isn’t tough enough. Exile is better. Fortunately for Cox this isn’t the Stalinist Soviet Union or his fate could be a lot worse.

Cox’s failures are too numerous to count. However, I’ll give it a try. Below are what I think are his top 5 failings.

1.

Failure to enforce disclosure laws and regulations.

Disclosure rules and regulations protect investors by requiring companies to disclose everything that is needed for informed investment decisions. And, CEOs and CFOs are required to sign certifications that such disclosure is materially accurate, complete, and that their companies have adequate internal controls to ensure such accuracy and completeness.

Enforcement of disclosure rules and regulations has been a joke. CEOs lie to shareholders with impunity and without fear of SEC enforcement. It is impossible to conclude that SEC filings for Freddie, Fannie, AIG, Lehman, or Bear Stearns complied with SEC rules and regulations.

However, instead of enforcement by the SEC, there is silence. While not all management actions are criminal, why hasn’t the SEC used its civil enforcement authority, i.e., assessing fines and penalties? How about protecting future investors by banning failed executives and boards of directors from serving in executive management at other public companies?
2.

Failure to enforce accounting standards.

When Cox states that the SEC doesn’t have regulatory authority over capital adequacy of financial services companies, he isn’t telling the truth. The SEC has regulatory authority over the financial statements of ALL publicly traded companies in the U.S. which of course includes the financials. If Cox had required greater reserves and transparency of financial services companies it would have happened.

Every quarter all publically traded companies file reports with the SEC that are provided to shareholders and the SEC has review and comment authority. If the SEC deems financial disclosure inadequate, incomplete or opaque it has the authority to force the company to amend its filings. It also has authority to establish accounting standards for publically traded companies which means it can have different requirements than GAAP.

So when the AIG filed its last quarterly report and decided that it didn’t need to have loan loss reserves against defaulting mortgages and securities, the SEC had the ability to require additional loan loss reserves. When Freddie and Fannie decided to pretend that defaulted mortgage were good assets because it changed its accounting standards, the SEC could have just said “no”. When Lehman manufactured $2.4 billion of pre-tax income by pretending that it wasn’t going to repay its debts (one of the dumber aspects of mark to market accounting), the SEC should have protected investors with disclosure.
3.

Failure to supervise the rating agencies.

Cox wants everyone to believe that despite being the rating agency’s only regulator, the SEC has no oversight or enforcement authority and cannot influence their performance. Once again, the SEC’s statements are false. Cox assumes that no one will take the time to read the Credit Rating Agency Reform Act of 2006 which states that the SEC has the right to suspend or revoke the license of any of rating agency for a wide range of reasons. Rating agency regulation and reform is Cox’s responsibility.
4.

Failure to investigate and prevent market manipulation, i.e., naked short selling.

Free markets are supposed to be honest markets. The naked short selling issue isn’t new and the SEC’s knee jerk emergency response is an embarrassment. The ban on short selling of 799 stocks is very similar to Putin’s actions this week to manipulate the Russian stock market. I haven’t a clue whether or not the uptick rule works, but I know that enforcing rules on naked short selling shouldn’t have required destructive and ill thought out emergency orders. In the middle of the 1800’s the legendary financial scoundrel, Daniel Drew, understood naked short selling was bad (as he lost his fortune covering a short squeeze) when he said, “He who sells what isn’t his’n, Must buy it back or go to prison.” Too bad Cox never took economic history in school (or googled economic trivia).
5.

Failure to protect small investors.

It is no coincidence that according to the FT, stock ownership by individual investors is at an all-time low. The average individual investor knows that his chances in the market aren’t good. And the SEC doesn’t seem to care if the average guy is disenfranchised from the economic future of America. In addition to the above failures, Cox forgot that it was his job to make sure that brokers shouldn’t engage in deceptive sales practices (like in the sale of auction rate securities and the sale of Freddie and Fannie common and preferred stock to small investors because they were “guaranteed” by the government). Cox refuses to support private litigation by individual investors who were ripped off in the stock and bond market. If the SEC doesn’t protect the little guy, who will?

It is hard to think of how anyone could have done a worse job than Chris Cox (other than engaging in illegal conduct). But if anyone can think of things that I have missed, please feel free to tell everyone reading this by commenting. I doubt that my list is complete.

Fixed Annuities

How stable are life insurance companies?

2008-09-20T08:00:00.000-07:00
Are these stable companies?

Every company our agency uses has a strong financial rating as determined by the various rating agencies such as A. M. Best, Standard and Poor's and Moody's Bond Ratings.

What is "Preferred Plus", "Preferred", and "Standard"?

Insurance companies are learning more and more about identifying their risks. Since cancer and cardiovascular disease are the two leading causes of death where the risk can be lessened by the individual, companies zero in on these risks. Those that qualify for the super preferred would be less at risk, then the preferred, then the standard. These companies look at height and weight, blood pressure, cholesterol(good and bad), family history(relatives dying before 60 of CV disease or cancer), personal history of cancer and CV disease, and smoking history.

nsurance industry; AIG insurance policy, annuity holders shouldn't worry

2008-09-19T13:21:00.001-07:00

Insurance customers of AIG shouldn't worry yet
Insurance customers of AIG shouldn't worry yet
Insurance industry; AIG insurance policy, annuity holders shouldn't worry
September 17, 2008: 05:27 PM EST

NEW YORK (Associated Press) - The financial problems at American International Group Inc. may be causing you great concern today if you hold an AIG life, health, home or auto insurance policy, or have an annuity with the company.

Insurance industry officials and analysts say there's little for policyholders to worry about today, but they say they're watching the situation carefully.

They're keeping a close eye, because the potential impact in the United States for insurance policy holders is significant. The Insurance Information Institute says AIG ranks in the top 10 of insurance companies in fixed annuities sold through banks. Fixed annuities guarantee the principal and fixed payments to the buyer for a specified period of time, usually until death. AIG also ranks among the top writers of auto insurance, commercial insurance and life insurance. It led the nation in fixed annuities sold through banks, writing more than $5 billion in 2007. AIG also led in commercial insurance writing $24 billion in policies in 2007.

Here are the answers to some key questions about where AIG's insurance businesses stand and how it may effect you.

Q: What is going to happen to the insurance businesses owned by AIG?

A: The infusion of $85 billion into AIG offers financial stability so the company will have time to decide which assets or business segments it should sell and to whom. It hasn't been disclosed whether the insurance segment, or portions of it, would be sold.

"We believe the insurance subsidiary to be financially sound and continues to be sound today," said analyst Joyce Sharaf of A.M. Best Co., one of the nation's main insurance ratings companies. She said Wednesday that AIG holds major insurance businesses that "are enviable franchises that could be sold in whole or in part."

A.M. Best analyst Marc Steinberg said he's continuing to review AIG's ratings and analysts are closely monitoring the situation as it unfolds. Analysts believe, however, that insurance policyholders are safe for now, he said.

Insurance regulators in New York, which have regulatory oversight over New York-based AIG, and the National Association of Insurance Commissioners said the company's insurance operations remain solvent and can pay claims.

Insurance companies in the United States are closely regulated by government agencies established by the states in which they are based.

The company released a statement Tuesday evening which said: "Policyholders of AIG companies around the world can rest assured that AIG's commitments will continue to be honored."

---

Q: Should I be worried if I have health or life insurance policies with AIG and what if I have a retirement annuity?

You should first keep in mind that AIG continues to operate, it has not filed for bankruptcy protection and has not been declared insolvent. Even if the insurance portion of the business was for some reason declared insolvent, there are protections in place similar to the FDIC insurance that backs up your bank deposits.

Life and health insurance, and products like annuities are covered by insurance guarantee associations that have been established in every state, said Peter Gallanis, president of the National Organization of Life and Health Insurance Guaranty Associations. The associations step in when insurance regulators in your state declare an insurance company insolvent and it's placed in receivership.

The level of coverage may vary by state, but every state association provides withdrawal and cash value coverage for annuities of at least $100,000. About a dozen states offer up to $300,000 and a few others offer up to $500,000.

Life insurance policies are backed up with at least $300,000 in life insurance death benefits and $100,000 in cash surrender or withdrawal value. States offer at least $100,000 in health insurance policy benefits.

In the past 25 years more than $20 billion in coverage benefits have been provided by the state associations for policyholders and annuity clients of dissolved insurance companies. In that time, the associations have provided protection for more than two million policyholders and worked on more than 60 multistate insolvencies.

---

Q: What should I do if I hold a homeowner's or car insurance policy with AIG?

Every state, the District of Columbia, Puerto Rico and the Virgin Islands have established property guarantee funds similar to those established to protect against losses in life and health insurance.

Guaranty funds generally pay the amount of coverage stipulated by the policy or $300,000, whichever is less. Each state has a law that places a cap on the coverage and some have higher amounts. New York, for example, has a property/casualty cap of $1 million.

Most state guarantee funds pay all of their state's workers' compensation benefits.

Since the late 1960s, the property/casualty guaranty system has paid out about $21 billion in claims on behalf of insolvent insurers. About $10 billion disbursed in the last six years, largely because of the frequent and severe hurricanes that have struck the Gulf Coast.

Since 1976, there have been about 600 insolvencies of property and casualty insurers. There are 2,648 property casualty insurers licensed to do business in the United States.

AIG life Insurance

2008-09-19T13:19:00.001-07:00

AIG collapse would have cost N.C. $1B - Charlotte Business Journal:
If the federal government had allowed insurance colossus American International Group Inc. and its subsidiaries to fail, N.C. regulators — and ultimately state taxpayers — would have been left with a mess that would have cost, according to a conservative estimate, more than $1 billion to clean up.

That’s the back-of-the-envelope number that officials at the Raleigh-based N.C. Insurance Guaranty Association came up with as they monitored this week’s developments on Wall Street, including the $85 billion federal loan guarantee that’s supposed to save AIG.

“We wanted to see what our exposure would be,” says Mike Newton, the association’s guaranty director. “And the more we looked at it, the wider our eyes got.”

The federal government now controls almost 80 percent of AIG.

Insurance companies, large and small, don’t file for bankruptcy in the way most businesses do. When they topple, they go into a liquidation process in which regulators try to make sure policyholders are protected ahead of other creditors.

On the state level, industry groups such as NCIGA enter the picture to ensure all outstanding policy claims are paid — on auto crashes, for example — and to refund customers any premium dollars paid for coverage that won’t be coming.

The industry groups get the funds to do that by passing the hat among the other insurance companies doing business in the state. In North Carolina, contributions come from 700 firms that, in 2007, had $6.5 billion in premiums in force. Any cleanup money those firms pay can then be deducted from their N.C. tax bills, which means the taxpayer ultimately picks up the tab.

As news of AIG’s chances of survival went from bad to worse, Newton searched the records of the 13 AIG property and casualty companies writing business in North Carolina. Those firms include American Home Assurance, National Union Fire and Granite State Insurance.

Outstanding claims and refundable premiums — the tab NCIGA would be held liable for refunding in case of a collapse — totaled $785 million. Of that total, $359 million was in the workers’ compensation arena, $43.6 million in auto insurance and $383.4 million in “all other categories, including fire, marine and similar types of policies.”

“These numbers we were looking at were just huge,” says Newton.

And that was just in North Carolina.

“Obviously, these numbers are the reason why the feds had to move,” says state Rep. John Blust of Greensboro, a member of the House Insurance Committee.

An AIG failure would have dwarfed the cost of any previous insurance collapse in the state. The most costly to date came after the demise of workers’ comp writer Reliance Insurance. That tab was $80 million.

In an AIG meltdown, the cost of a North Carolina cleanup would have gone even higher than Newton’s initial estimate, to perhaps $1 billion or more.

That’s because seven AIG subsidiaries also write life and health policies and various annuity plans in North Carolina. On the annuity front alone, AIG’s Sun America, at the beginning of 2007, was the state’s third-largest annuity writer at $331 million, giving it a market share of nearly 6 percent. Another subsidiary, AIG Annuity Insurance, had $46 million on its books, for a market share of nearly 1 percent.

The total North Carolina market is about $6 billion. The figures were complied by the state Department of Insurance.

If AIG’s subsidiaries firms had been caught up in the failure of their holding company, a second state group, the North Carolina Life & Health Insurance Guaranty Association, would have activated a procedure to pay consumer refunds of up to $300,000 per policyholder for claims and premium refunds.

That agency’s head, Lowell Miller, declines to put a figure on the possible cleanup costs. “But it would have been pretty significant,” he says. “The life and health numbers are big, and they generally are long-term contracts.”

Kristin Milam, a spokeswoman for the N.C. Department of Insurance, says the department routinely monitors the economic health of all the firms doing business in the state, including those under the AIG umbrella.

She notes it was the AIG holding company, not the insurance subsidiaries, that was in crisis. And Newton says all the AIG firms doing business in the state are well-capitalized and “doing fine.”

But because of the turmoil on Wall Street, he says it’s impossible to say for certain if the damage would have been limited to the holding company if AIG had gone under.

Annuity

Regulatory Safeguards Offer ‘Insurance Policy’ in Times of Crisis

2008-09-18T08:24:00.001-07:00

Insurance Consumers Protected by Solvency Standards (NAIC)
FOR IMMEDIATE RELEASE

INSURANCE CONSUMERS PROTECTED BY SOLVENCY STANDARDS
Regulatory Safeguards Offer ‘Insurance Policy’ in Times of Crisis

KANSAS CITY, Mo. (Sept. 16, 2008) — National Association of Insurance Commissioners (NAIC) President and Kansas Insurance Commissioner Sandy Praeger today issued the following statement in response to the financial issues facing American International Group (AIG):

“We have a very strong message for consumers: If you have a policy with an AIG insurance company, they are solvent and have the capability to pay claims. Our job is to ensure that they continue to have the ability to pay.

“In this particular instance, AIG’s insurance subsidiaries are being asked to provide liquid assets to the financially distressed non-insurance parent company in exchange for non-liquid assets. The New York State and Pennsylvania Insurance Departments are working with AIG to review the transaction. State insurance regulators will only approve this type of action if they are assured it is part of a total resolution of the liquidity issue at the parent company and fairly compensates its insurance company subsidiaries.

“As a holding company, AIG is a separate, federally regulated legal entity that is distinct and apart from its subsidiary insurers. The subsidiary insurers are governed by state laws designed to protect the interest of policyholders. State insurance regulators are committed to protecting the interest of policyholders and will work closely with AIG management and other regulators to fulfill this commitment.

“The No. 1 job of state insurance regulators is to make sure insurance companies operate on a financially sound basis. If needed, we immediately step in if it appears that an insurer will be unable to fulfill the promises made to its policyholders. This includes taking over the management of an insurer through a conservation or rehabilitation order, the goal being to get the insurer back into a strong solvency position.

“State regulators have numerous actions they can take to prevent an insurer from failing. Claims from individual policyholders are given the utmost priority over other creditors in these matters — and, in the unlikely event that assets are not enough to cover these claims, there is still another safety net in place to protect consumers: the state guaranty funds. These funds are in place in all states. If an insurance company becomes unable to pay claims, the guaranty fund will provide coverage, subject to certain limits.

“It is a state insurance regulator’s responsibility to protect policyholders and ensure a healthy, competitive market for insurance products. Strict solvency standards and keen financial oversight — based on conservative investment and accounting rules — continue to be the bedrock of state-based insurance regulation.”

About the NAIC

Headquartered in Kansas City, Mo., the National Association of Insurance Commissioners (NAIC) is a voluntary organization of the chief insurance regulatory officials of the 50 states, the District of Columbia and five U.S. territories. The NAIC’s overriding objective is to assist state insurance regulators in protecting consumers and helping maintain the financial stability of the insurance industry by offering financial, actuarial, legal, computer, research, market conduct and economic expertise. Formed in 1871, the NAIC is the oldest association of state officials. For more than 135 years, state-based insurance supervision has served the needs of consumers, industry and the business of insurance at-large by ensuring hands-on, frontline protection for consumers, while providing insurers the uniform platforms and coordinated systems they need to compete effectively in an ever-changing marketplace. For more information, visit www.naic.org/press_home.htm.

Annuity

INSURANCE CONSUMERS PROTECTED BY SOLVENCY STANDARDS

2008-09-18T08:23:00.001-07:00

Insurance Consumers Protected by Solvency Standards (NAIC)
FOR IMMEDIATE RELEASE

INSURANCE CONSUMERS PROTECTED BY SOLVENCY STANDARDS
Regulatory Safeguards Offer ‘Insurance Policy’ in Times of Crisis

KANSAS CITY, Mo. (Sept. 16, 2008) — National Association of Insurance Commissioners (NAIC) President and Kansas Insurance Commissioner Sandy Praeger today issued the following statement in response to the financial issues facing American International Group (AIG):

“We have a very strong message for consumers: If you have a policy with an AIG insurance company, they are solvent and have the capability to pay claims. Our job is to ensure that they continue to have the ability to pay.

“In this particular instance, AIG’s insurance subsidiaries are being asked to provide liquid assets to the financially distressed non-insurance parent company in exchange for non-liquid assets. The New York State and Pennsylvania Insurance Departments are working with AIG to review the transaction. State insurance regulators will only approve this type of action if they are assured it is part of a total resolution of the liquidity issue at the parent company and fairly compensates its insurance company subsidiaries.

“As a holding company, AIG is a separate, federally regulated legal entity that is distinct and apart from its subsidiary insurers. The subsidiary insurers are governed by state laws designed to protect the interest of policyholders. State insurance regulators are committed to protecting the interest of policyholders and will work closely with AIG management and other regulators to fulfill this commitment.

“The No. 1 job of state insurance regulators is to make sure insurance companies operate on a financially sound basis. If needed, we immediately step in if it appears that an insurer will be unable to fulfill the promises made to its policyholders. This includes taking over the management of an insurer through a conservation or rehabilitation order, the goal being to get the insurer back into a strong solvency position.

“State regulators have numerous actions they can take to prevent an insurer from failing. Claims from individual policyholders are given the utmost priority over other creditors in these matters — and, in the unlikely event that assets are not enough to cover these claims, there is still another safety net in place to protect consumers: the state guaranty funds. These funds are in place in all states. If an insurance company becomes unable to pay claims, the guaranty fund will provide coverage, subject to certain limits.

“It is a state insurance regulator’s responsibility to protect policyholders and ensure a healthy, competitive market for insurance products. Strict solvency standards and keen financial oversight — based on conservative investment and accounting rules — continue to be the bedrock of state-based insurance regulation.”

About the NAIC

Headquartered in Kansas City, Mo., the National Association of Insurance Commissioners (NAIC) is a voluntary organization of the chief insurance regulatory officials of the 50 states, the District of Columbia and five U.S. territories. The NAIC’s overriding objective is to assist state insurance regulators in protecting consumers and helping maintain the financial stability of the insurance industry by offering financial, actuarial, legal, computer, research, market conduct and economic expertise. Formed in 1871, the NAIC is the oldest association of state officials. For more than 135 years, state-based insurance supervision has served the needs of consumers, industry and the business of insurance at-large by ensuring hands-on, frontline protection for consumers, while providing insurers the uniform platforms and coordinated systems they need to compete effectively in an ever-changing marketplace. For more information, visit www.naic.org/press_home.htm.

Annuity

Life Insurance - If I apply and don't get the rate I applied for, what happens?

2008-09-16T15:25:00.000-07:00
The company many times will make another offer. If our office thinks we can get a better offer from another company, we will ship your file over there.

How long does life insurance application process take?

2008-09-12T15:23:00.000-07:00
If no doctors records are ordered, 3 to 4 weeks( Less if there is an urgency). If doctors records have to be obtained, 4-7 weeks since we are dependent on the promptness of the doctor.

How do I purchase a life insurance policy?

2008-09-07T15:21:00.000-07:00
First, an application is sent for your signature. At the same time a medical examiner contacts you to set a convenient time at your home or office to take blood and urine. On larger amounts or older ages, a resting EKG or blood pressure check may be required. It is important to give blood after a 12 hour fast so it is better to do the exam in the morning. Once the insurance company receives the exam results, the application, and any additional doctors records that the insurance company obtains at their expense, we receive an offer. Every expense in this process is paid for by the insurance company!

Life Insurance Information Sources

2008-09-03T08:00:00.000-07:00
Additional information about the insurance companies can be found by reading insurance company rating service reports. Five major insurance rating companies grade insurers on their financial health and ability to pay claims. These companies are: A.M. Best, Standard & Poors, Moody’s Investor Service, Duff & Phelps, and Weiss Research. You should check two or three of these services to get a good look at the company’s condition. They can usually be found in your local library.

Annuity Insurance Guide

Universal Life Insurance - How To Protect Your Investment?

2008-08-31T08:00:00.000-07:00
Recently, high-risk investment strategies have threatened the solvency of some companies and thus the safety of policy benefits. Be sure to check out the insurer’s industry rating (as provided by independent rating services) before committing your funds. Also, make sure that your life insurance company is licensed in California. Owners and group insurance certificate holders of life insurance policies issued by companies licensed in California may be partially protected in the event of the failure of the insurer by the California Life and Health Insurance Guarantee Association.

Life Insurance Sales Illustrations

2008-08-27T08:00:00.000-07:00
It is likely that an agent will show you one or more life insurance sales illustrations. An illustration consists of a series of numbers indicating how the policy works. The illustration usually shows the guaranteed results under the policy for each year in the future, and the results if all the non-guaranteed items continue unchanged at their present level. This will probably not happen - actual results may be better or worse than the non-guaranteed amounts shown in the illustration (but not worse than those that are guaranteed).

Annuities - Protest Rages over EIA Proposal

2008-08-26T10:01:00.001-07:00

Protest Rages over EIA Proposal
By Edward Hayes
August 18, 2008

The Comment period on the SEC’s rule proposal to regulate equity-indexed annuities (EIAs) as securities still has three weeks left. But some industry groups have come out to criticize the measure, with one of the biggest annuity trade groups still looking into it.

Last month, the SEC proposed treating EIAs, which individual states now regulate, as securities and to place them fall the jurisdiction of SROs like FINRA. Equity indexed annuities are investments that earn their returns from a stock index that the insurance firm invests in.

While regulators consider variable annuities to be securities products, EIAs have never been as clear-cut.

Until the proposal, there was no definitive guidance for firms as to whether or not EIAs were securities. The rule proposal specifically states that EIAs are securities offerings and must be sold by a broker-dealer certified to sell securities.

Some proponents of the rule change say the rule proposal was necessary because securities regulators focus on investor protection, while insurance regulators are primarily concerned that the insurance companies they oversee don’t become insolvent.

But the National Association for Fixed Annuities (NAFA) disagrees. It claims that state insurance regulators are equally concerned about investors.

“State insurance departments have very robust departments that deal with consumer complaints and sales tactics,” said James Jorden, an outside council with NAFA. “For years, they have been responding to issues of that sort.”

NAFA publically expressed its reservations about the proposal, although it has not yet submitted a letter to the SEC. Meanwhile NAVA, a major VA trade group, is still quiet about the measure. Both groups requested an additional 90 days to confer with their members.

Even though NAFA has not submitted its opinion yet, its representatives, as well as other groups have already laid out some initial concerns. Opponents of the proposal believe that the states the proper regulators to handle the offerings, and claim that state insurance regulators have been beefing up regulations concerning EIAs and seniors.

Some of the state insurance regulators’ measures include closer scrutiny on sales of EIAs and other fixed annuity offerings. Also some states have passed rules that require firms check the the suitability of EIA sales. At the same time, insurance companies have worked to improve the training of the sales staff and have given their own policies and procedures a closer look regarding the products.

Other commenters on the proposal have shown the more emotional side of the EIA regulatory issue.

“The securities industry is living in glass houses, and throwing stones at an industry that has protected the lives, property, and nest eggs of people for a long, long time,” said Steven Delaney, a member of American Annuity Advocates.com, said in his letter to the SEC. “It’s all ridiculous, again, greed, imperialism on the part of the Rulers of the Universe, FINRA.”

The proposal is part of the SEC and FINRA’s effort to combat unsuitable sales to seniors. After looking into “free lunch” seminars, the two have begun filing cases and proposing new rules and regulations. The rule proposal on the EIAs is the latest in that effort.

The problem is, while the regulators believe those offerings pose a threat to seniors, those who deal with EIAs on a regular basis aren’t convinced that is the case.

“Through state regulations, there are very robust standards applied to every sale,” Jorden said. “The vast majority of these sales are suitable.”

He went on to argue that the number of complaints about those specific offerings is less than 1% at each insurance company. Others argued that while there are unsuitable sales made with EIAs, it is a common fact found associated with all finance services offerings.

Some provisions that make EIAs a low-risk investment are the fact that they must guarantee a return on the buyer’s principal and rate of return, Jorden said. In other words, if a buyer invests $100 at 10% interest, so long as they remain in the offering for the required amount of time, they will have the same money when they pull out at the same interest rate.

NAFA also contends that Congress and the SEC have already established that EIAs can’t be securities. First, the ’33 Act lists “insurance or endowment policy or annuity contract or optional annuity contract[s]” as exempt from being classified as securities. And Rule 151, which became effective in 1986, establishes a safe harbor for fixed annuities from securities regulations, according to Jorden.

“Congress decided years ago [fixed annuities] should not be regulated under securities regulations and the courts have validated them,” Jorden said.

He also referenced the 2002 Malone v. Addison Marketing Insurance case, where a United States District Court ruled that the definition of a security does not include fixed annuities.

As it stands now, comments on the rule proposal will close on Sept. 10, but if the Commission wishes to extended the period it would most likely do so when the current comment period ends.

Have a comment? Let us know what you think of this or another CCH Wall Street story by clicking here.

Index Annuity Guide

Life Insurance Illustrations Show Guarantees

2008-08-24T15:03:00.000-07:00
You may be thinking about buying a policy where cash values, death benefits, dividends or premiums may vary based on events or situations the company does not guarantee (such as interest rates). If so, you may get an illustration from the agent or company that helps explain how the policy works. The illustration will show how the benefits that are not guaranteed will changes as interest rates and other factors change. The illustration will show you what the company guarantees. It will also show you what could happen in the future. Remember that nobody knows what will happen in the future. You should be ready to adjust your financial plans if the cash value doesn't increase as quickly as shown in the illustration. You will be asked to sign a statement that says you understand that some of the numbers in the illustration are not guaranteed.

Variable Life Insurance Value Depends on Performance

2008-08-21T08:00:00.000-07:00
Variable Life Insurance is a kind of insurance where the death benefits and cash values depend on the investment performance of one or more separate accounts, which may be invested in mutual funds or other investments allowed under the policy. Be sure to get a prospectus from the company when buying this kind of policy and STUDY IT CAREFULLY. You will have higher death benefits and cash value if the underlying investments do well. Your benefits and cash value will be lower or disappear if the investments you chose didn't do as well as your expected. You may pay extra premium for a guaranteed death benefit.

Universal Life Insurance Is Flexible

2008-08-17T14:57:00.000-07:00
Universal Life Insurance is a kind of flexible policy that lets you vary your premium payments. You can also adjust the face amount of coverage. Increases may require proof that you qualify for the new death benefit. The premiums you pay (less expense charges) go into a policy account that earns interest. Charges are deducted from the account. If your yearly premium payment plus the interest in your account earns less that the charges, your account value will become lower. If it keeps dropping, eventually your coverage will end. To prevent that, you may need to start making premium payments, or increase your premiums payments, or lower your death benefits. Even if there is enough in your account to pay the premiums, continuing to pay premiums yourself means that you build up more cash value.

Annuity Buyers Guide

Whole Life Insurance

2008-08-12T14:53:00.001-07:00
Whole Life Insurance covers you for as long as you live if your premiums are paid. You generally pay the same amount in premiums for as long as you live. When you first take out the policy, premiums can be several times higher than you would initially pay for the same amount of term insurance. But they are smaller than the premiums you would eventually pay if you were to keep renewing a term policy until your later years.

Some whole life policies let you pay premiums for a shorter period such as 20 years, or until age 65. Premiums for these policies are higher since the premiums payments are made during a shorter period.

Cash Value Life Insurance

2008-08-06T13:26:00.000-07:00
Cash Value Life Insurance is a type of insurance where the premiums charged are higher at the beginning that they would be for the same amount of term insurance. The part of the premium that is not used for the cost of insurance is invested by the company and builds up a cash value that may be used in a variety of ways. You may borrow against a policy's cash value by taking a policy loan. If you don't pay back the loan and the interest on it, the amount you owe will be subtracted from the benefits when you die, or from the cash value if you stop paying premiums and take out the remaining cash value. You can also use your cash value to keep insurance protection for a limited time or to buy a reduced amount without having to pay more premiums. You can also use the cash value to increase your income in retirement or to help pay for needs such as a child's tuition without canceling the policy. However, to build up this cash value, you must pay higher premiums in the earlier years of the policy. Cash value life insurance may be one of several types; whole life, universal life and variable life are all types of cash value life insurance.

Term Life insurance Does Not Build Up Cash Value

2008-07-30T13:23:00.000-07:00
Term Insurance covers you for a term of one or more years. It pays a death benefit only if you die in that term. Term insurance generally offers the largest insurance protection for your premium dollar. It generally does not build up cash value.You can renew most term insurance policies for one or more terms even if your health has changed. Each time you renew the policy for a new term, premiums may be higher. Ask what premiums will be if you continue to renew the policy. Also ask if you will lose the right to renew the policy at some age. For a higher premium, some companies will give you the right to keep the policy in force for a guaranteed period at the same price each year. At the end of that time you may need to pass a physical examination to continue coverage, and premiums may increase.You may be able to trade many term insurance policies for a cash value policy during a conversion period, even if you are not in good health. Premiums for the new policy will be higher than you have been paying for the term insurance.

Thinking Of Dropping A Life Insurance Policy?

2008-07-21T13:17:00.000-07:00
What About the Policy You Have Now?

If you are thinking about dropping a life insurance policy, here are some things you should consider:
•If you decide to replace your policy, don't cancel your old policy until you have received the new one. You then have a minimum period to review your policy and decide it is what you wanted.
•It may be costly to replace a policy. Much of what you paid in the early years of the policy you have now, paid for the company's cost of selling and issuing the policy. You may pay this type of cost again if you buy a new policy.
•Ask your tax advisor if dropping your policy could affect your income taxes.•If you are older or your health has changed, premiums for the new policy will often be higher. You will not be able to buy a new policy if you are not insurable.
•You may have valuable rights and benefits in the policy you now have that are not in the new one.•If the policy you have now no longer meets your needs, you may not have to replace it. You might be able to change your policy or add to it to get the coverage or benefits you now want.
•At least in the beginning, a policy may pay no benefits for some causes of death covered in the policy you now have.
In all cases, if you are thinking of buying a new policy, check with the agent or company that issued you the one you have now. When you bought your old policy, you may have seen an illustration of the benefits of your policy. Before replacing your policy, ask your agent or company for an updated illustration. Check to see how the policy has performed and what you might expect in the future, based on the amounts the company is paying now.How Much Do You Need?Here are some questions to ask yourself:•How much of the family income do I provide? If I were to die early, how would my survivors, especially my children, get by? Does anyone else depend on me financially, such as a parent, grandparent, brother or sister?
•Do I have children for whom I'd like to set aside money to finish their education in the event of my death?•How will my family pay final expenses and repay debts after my death?•Do I have family members or organizations to whom I would like to leave money?•Will there be estate taxes to pay after my death?
•How will inflation affect future needs?As you figure out what you have to meet these needs, count the life insurance you have now, including any group insurance where you work or veteran's insurance. Don't forget Social Security and pension plan survivor's benefits. Add other assets you have: savings, investments, real estate and personal property. Which assets would your family sell or cash in to pay expenses after your death?What is the Right Kind of Life Insurance?

All policies are not the same. Some give coverage for your lifetime and others cover you for a specific number of years. Some build up cash values and others do not. Some policies combine different kinds of insurance, and others let you change from one kind of insurance to another. Some policies may offer other benefits while you are still living. Your choice should be based on your needs and what you can afford.There are two basic types of life insurance: term insurance and cash value insurance. Term insurance generally has lower premiums in the early years but does not build up cash values that you can use in the future. You may combine cash value life insurance with term insurance for the period of your greatest need for life insurance to replace income.

Life Insurance Guide

2008-07-14T13:01:00.000-07:00
LIFE INSURANCE BUYER'S GUIDE
Prepared by the National Association of Insurance Commissioners
The National Association of Insurance Commissioners is an association of state insurance regulatory officials. This association helps the various insurance departments to coordinate insurance laws for the benefit of all consumers.
This Guide Does Not Endorse Any Company or Policy Buying Life Insurance
When you buy life insurance, you want coverage that fits your needs.First, decide how much you need - and for how long - and what you can afford to pay. Keep in mind the major reason you buy life insurance is to cover financial effects of unexpected or untimely death. Life insurance can also be one of many ways to plan for the future.Next, learn what kinds of policies will meet your needs and pick the one that best suits you. Then, choose the combination of policy premium and benefits that emphasizes protection in case of early death, or benefits in case of long life, or a combination of both.It makes good sense to ask a life insurance agent or company to help you. An agent can help you review your insurance needs and give you information about the available policies. If one kind of policy doesn't seem to fit your needs, ask about others.This guide provides only basic information. You can get more facts from a life insurance agent or company or from your public library.(4-99)IMPORTANT THINGS TO CONSIDER
1. Review your own insurance needs and circumstances. Choose the kind of policy that has benefits that most closely fit your needs. Ask an agent or company to help you.
2. Be sure that you can handle premium payments. Can you afford the initial premium? If the premium increases later and you still need insurance, can you still afford it?3. Don't sign an insurance application until you review it carefully to be sure all the answers are complete and accurate.
4. Don't buy life insurance unless you intend to stick with your plan. It may be very costly if you quit during the early years of the policy.
5. Don't drop one policy and buy another without a thorough study of the new policy and the one you have now. Replacing your insurance may be costly.
6. Read your policy carefully. Ask your agent or company about anything that is not clear to you.
7. Review your life insurance program with your agent or company every few years to keep up with changes in your income and your needs.

Life Insurance

2008-07-13T13:07:00.001-07:00

Talk with parents about their finances, last wishes - San Jose Mercury News
YOU'LL HELP THEM ORGANIZE AFFAIRS, AND HELP YOURSELF
By Pamela Yip
Dallas Morning News

DALLAS - It is the one discussion that adult children must have with their aging parents.

Many cringe and avoid it because the subject's so sensitive - your parents' finances, how they're organized, and what their last wishes are.

Some parents guard their finances closely, even from their children. To them, it's a matter of privacy.

Some fear that their children are only after their money.

But helping your parents organize their finances and seeing whether they've planned well so that their last wishes are carried out could open the door to examining your own finances.

That's what happened to Susan Livingston of Dallas.

"As an occupational therapist specializing in home health and geriatrics, you might assume that I would be very capable at managing my elderly parents' finances as they aged, with the understanding of the dynamic of loss and how money is such a symbol of independence," she said. "If only that were true."

Livingston's father, who died in November, had cancer, and her mother, who has Alzheimer's disease, is in a nursing home in Pennsylvania.

They didn't have their finances organized and weren't eager to talk to their children about them.

'Very guarded'

"My parents were very guarded - that money is not your business," said Livingston, 52. "They didn't plan for the obvious inevitability that one of them or both of them will pass away, and that somebody will have
Advertisement
to deal with it."

She said she had to "dig through the desk" the day before her father's funeral to find out what assets her parents had and whom to contact.

Her parents had refused to draw up a power of attorney, which would have authorized another person to handle their financial affairs if they were incapacitated.

"My mother was so paranoid," said Livingston, who is her mother's guardian and is still sorting through her finances. "She would say, 'You just want our money.' "

As awkward as the subject is for most families, it has to be addressed.

"It's essential for caregivers to know the state of their family members' legal affairs and to be secure in the knowledge that key legal decisions have been made and documented before a crisis occurs," said Sandra Timmermann, director of the MetLife Mature Market Institute, part of Metropolitan Life Insurance.

"In some instances, older adults are reluctant to share financial and legal information with adult children," she said. "In such cases, it might be advisable that they consult with a neutral third party, such as an attorney, a qualified financial adviser, social worker or trusted friend to address legal issues and then have an attorney prepare the proper documents so that they will be accessible to family members in an emergency."

When talking to parents about their finances, children must be sensitive to their parents' need to still feel in charge, said Lynn Lawrance, a certified financial planner at Financial Network Investment in Dallas and Livingston's planner.

Independence, control

"The key thing for your parents is a sense of independence and control," she said. "Try to help them offload some of the burden of handling the finances with someone they can trust. Be careful of trying to push that on your parents because independence and control are crucial to them."

It's a delicate dance and one that will lead many people to seek a financial adviser who can help them. There are specific things you need to look for in an adviser to help your parents.

Much of the advice applies to consumers in general, but it's especially important for seniors, who are prime targets for unscrupulous salespeople.

"The last thing people of this demographic need are product pushers," said Rick Salmeron, a certified financial planner at the Salmeron Financial Network in Dallas.

Pay close attention to the questions asked by a prospective adviser.

"When an amateur asks questions of a client, those questions are chosen to determine which product should be sold," Salmeron said. "The conversation is not actually about the client per se."

Follow your instincts.

"Boomers and seniors can and will sense that the conversation is not about meeting their needs, but about selling something," Salmeron said. "When this happens, run. You now know you're working with a salesperson who is trying to make a quota, not someone who is looking out for your best interests."

Looking in a mirror

By helping your parents, you'd be surprised at how the process will turn the mirror on your own financial planning.

You also see what retirement is really like and how much money it really takes to live a post-work life.

"You learn from your parents' mistakes - what you shouldn't do - and you also learn about what they did that was right that you also should do," Salmeron said.

Determine if you have enough life insurance to support your family after your death. Document where your bank accounts are located and what advisers to contact at your death.

"Educate your children," added Livingston, who said she and her husband have talked about their finances with their three grown, or nearly grown, daughters. (Two are in college and one is in the Navy.)

"Share with them what you have set up. Provide them with the tools to help you when you need help, in advance of when you really need help," she said. "During a crisis of health, it may be too late."
Technorati Tags: life insurance

Life Insurance

2008-07-07T12:57:00.000-07:00
This guide can help you when you shop for life insurance. It discusses how to:Find a Policy That Meets Your Needs and Fits Your Budget Decide How Much Insurance You NeedMake Informed Decisions When You Buy a Policy

The Ongoing Battle for Insurance Regulatory Reform

2008-07-07T06:45:00.001-07:00

U.S. Insurance News® - 200807078814 | The Ongoing Battle for Insurance Regulatory Reform | Insurance News
Written by Martin F. Grace, PhD, JD and Robert W. Klein, PhD
Monday, 07 July 2008
Insurance regulation in the U.S. is at a crossroads. It is the last major sector of financial services regulated primarily at the state level. The state framework and its policies are becoming increasingly out of synch with the evolution of insurance markets nationally and internationally. Significant segments of the industry support some form of federal regulation to remove artificial state barriers that impede competition and undermine insurers’ efficiency.

Advocates of federal regulation also hope that it will adopt policies that will further promote efficient markets. However, federal regulatory proposals are strongly opposed by the states and other industry segments which has resulted in a fierce debate about how insurance should be regulated.

The issues surrounding the Future of Insurance Regulation will be examined in an important conference on July 9 in Washington, DC. Experts in insurance and financial regulation will present and discuss scholarly papers on several topics including federal versus state regulation, regulatory policy reform, and their implications for financial convergence and international trade. The conference is being coordinated by the Department of Risk Management and Insurance at Georgia State University and co-sponsored by the American Enterprise Institute and the Brookings Institution with funding support from the Risk Foundation. Readers can obtain more information and register for the conference at http://www.rmi.gsu.edu/insurance-regulation.html.

One of the principal subjects of the conference will be the proposal to create an Optional Federal Charter (OFC) for insurance companies and agents that would preempt state regulation for federally-chartered firms. An OFC is the vehicle preferred by federal regulation advocates and there is a strong push for its adoption. It is also supported as an intermediate step for insurance by the Treasury in its blueprint for overall financial institution regulatory reform. While an OFC would allow insurers and agents to choose to remain state-regulated, the states and their supporters believe that it would substantially diminish their grip on the industry.

The legislative vehicle for the OFC approach is the National Insurance Act (NIA) – S. 40 – introduced in 2007 by Senators John Sununu (R-NH) and Tim Johnson (D-SD). While there are many details that may or may not be in a final bill approved by the Congress, there are a number of important provisions that are likely to be present in any legislation that is enacted. Other approaches have been proposed such as federal standards for state regulation and a single-state licensing system, but an OFC has the most currency.

The NIA would set up an Office of National Insurance (ONI) within the Department of the Treasury akin to the Office of the Comptroller of the Currency (OCC). The NIA would permit both life and non-life insurance companies and agents to apply to the ONI for a charter and license to sell particular products in all states. It further permits the ONI to regulate the solvency and market conduct of insurers within its jurisdiction. Additionally, it authorizes the Commissioner of National Insurance to establish a comprehensive insolvency resolution scheme which includes the state guaranty associations (funds) which meet minimum qualifications.

The NIA would allow the states to continue to regulate insurers and agents who wish to remain state-regulated. The states also would be allowed to continue to collect premium taxes from all insurers as long as they did not discriminate against federally-chartered insurers. Federal insurers also could be required to participate in state residual market mechanisms.

Thus, the ONI would oversee solvency, policy forms, other aspects of market conduct, and insurer insolvencies. It would not regulate prices (except that prices and reserves have to be based upon sound actuarial principles) or underwriting standards. Further, assuming that the states’ solvency guarantee system is adequate, a national insurer would participate in the state solvency guaranty association. If a state system does not qualify, there would be a federal plan that would cover these insolvent OFC insurers’ obligations in the state. How the ONI would regulate “market conduct” remains uncertain.

In general, the OFC is promoted by the larger life and non-life insurers. To its proponents an OFC has three main benefits. First, the business of insurance is essentially an interstate business. As such it is hindered by the fifty-state regulatory apparatus. This implies increased costs for insurers for additional and sometimes conflicting regulatory requirements. Second, if costs are higher for insurers, then some of these costs are likely passed onto consumers. Third, the states never will have a simple and uniform approach to product approval or pricing and other market practices. This prevents the timely introduction of new products and reduces consumer choices. In contrast, other financial service providers have a one-stop approval for new products. Over time, the benefits of financial innovation will accrue to the providers of non-insurer financial service firms to the detriment of the insurance industry.

One of the major benefits of state regulation of insurance is the fifty different state systems which act as a laboratory for regulation. Over time good regulation will prevail as other states adopt successful regulatory approaches. In conjunction with this is the fact that regulation should be subject to local control as it is local voters whose tastes and preferences dictate the type of regulatory system they would prefer. Both of these arguments for state regulation require that good regulation will eventually be adopted by a super-majority of states and that a state’s regulatory philosophy does not impose costs on other states’ residents or out-of-state insurers. Proponents of an OFC make the argument that the benefits of state regulation do not exist in reality. The states counter that an OFC will undermine the consumer protections currently existing in state laws. However, we seriously question whether many state regulations ultimately benefit consumers as well as the proposition that the federal government cannot adequately protect consumers.

The strong state opposition to OFC legislation has caused some of its legislative supporters to consider alternative paths to the Holy Grail. It is possible that legislation will be introduced for an OFC that would apply only to life insurers. There appear to be fewer legislative concerns about (and perhaps less political opposition to) a life-only OFC. Life insurance products already tend to be more standardized across states and life insurance is subject to less state-specific preferences, e.g., price regulation, than property-casualty insurance. Obviously, property-casualty insurers would be greatly dismayed if an OFC was restricted to life insurance, although they might still hope that their day would come.

A new wrinkle was recently added with the introduction of legislation by Rep. Paul Kanjorski (D-PA) that would establish an Insurance Information Office (IIO) within the Treasury. The OII would obtain insurer financial and market conduct data from state regulators and develop greater insurance expertise within the federal government. Some federal advocates are concerned that an IIO will undermine the impetus for an OFC, while others may view it as helping to pave its way.

It is important to not lose sight of the need for significant reforms in insurance regulatory policies regardless of who are the regulators. The current prescriptive, accounting-based system for solvency regulation needs to be revamped consistent with modern financial risk management and international standards. Insurance markets are greatly over-regulated in terms of prices, products and other market practices. Carefully crafted deregulation that would preserve essential consumer protections but allow markets to operate more freely and efficiently is essential.

Many observers believe that the creation of an OFC or something like it is more a matter of when than if. If history is any guide, we may see incremental changes which gradually increase the federal role in insurance regulation until the ultimate objective is achieved. Insurance regulation is at a crossroads with many paths that eventually lead to the same place – a modern, national system of insurance regulation.

Professors Martin F. Grace and Robert W. Klein are respectively the Associate Director and Director of the Center for Risk Management and Insurance Research at Georgia State University’s Robinson College of Business.

Is “Whole Life” Health Insurance Possible?

2008-07-07T06:44:00.001-07:00

Is “Whole Life” Health Insurance Possible?
MetLife (MET) characterizes Whole Life as permanent life insurance along with Universal Life and Variable Universal Life. I would like to focus on basic whole life as a model for health insurance because it is the most straightforward. The other products mix varying degrees of investment risk with the insurance death benefit.

MetLife’s whole life policies guarantee level premiums, cash value, death benefits, and the possibility of dividends. Like life insurance, most health insurance policies contain a lifetime benefits cap. A good health insurance policy might cap lifetime benefits at $2M or more. Unlike life insurance, only term health insurance is available. Most states regulate guaranteed renewability for individuals that retain the same plan and insurer, but none of the other benefits of whole life are available.

Historically, life and health insurance purchasing behavior has differed in the US. A majority of Americans still get some form of health insurance with their jobs and only have to purchase health insurance during employment interruptions, starting a new business, or early retirement. On the other hand, life insurance benefits from employers are viewed as a supplement to a family’s self-purchased protection.

Given the premise that most Americans start out life healthy, buying the right to guaranteed level premium health insurance could be a tremendous economic benefit for families. The life insurance industry has long been able to convince parents to purchase life insurance for their children. The premise being their children might not qualify for medically underwritten life insurance later in life.

Whole life health insurance could be structured to supplement any gaps in employer provided care or completely independent. Unfortunately, most private health insurers don’t allow policy holders to have multiple health insurance policies (like Medicare supplement plans). This would put employer plans in conflict with whole life plans. Policy holders’ free will, such as employment choice and life style behavior, would affect the insurers’ payout risk.

I believe whole life health insurance is not only possible, but required to mitigate the anxiety in the American private health insurance system. The regulators surely could come up with payout rules when multiple policies are in force. Just think about first and second liens, or multiple classes of preferred stocks and bonds. Let’s get the actuaries to work.

Term life insurance is the low-cost best bet for most people

2008-07-05T20:13:00.001-07:00

Term life insurance is the low-cost best bet for most people

By CHRIS FARRELL

Chris Farrell: Your Money

More from Chris Farrell

* There's a 'do-over' for deciding when to take Social Security
* Your Money: Dreaming of financial strategies for early retirement
* Starting small, you'll need to learn some things on your own
* When you're ready to move your money, lump-sum is best
* Mom's investment seems inappropriate

Q I'm a married homeowner in my late 20s, contemplating life insurance. We want to make sure that if something happens to one of us the other would have some time to figure things out instead of selling the house and moving back in with parents. What do you recommend -- the more expensive comprehensive life insurance that we can take money out of later or term insurance?

MELISSA

A There's really only one reason to buy life insurance: To financially protect loved ones from an untimely death. Some insurance agents will try to sell you a policy as a way to save for retirement or for children's college education. Forget it. The financial world offers far better and cheaper ways to salt away long-term savings, such as a 401(k), a Roth IRA or a 529 college savings plan.

I'm a big fan of term life insurance for most people, especially in circumstances such as yours. Term is a pure death benefit. Premiums are cheap if you're in good health, although the cost of the policy increases as you get older. It's a simple product and it allows for comparison shopping. You'll want a low-cost, plain-vanilla policy from a blue chip, financially strong insurance company.

Permanent or "cash value" insurance comes with a tax-sheltered savings component, as well as life insurance. The investment returns are difficult to analyze. Types of policies include whole life, universal life, variable life and variable-universal. In general, these policies are expensive, with steep fees and commissions.

Cash value insurance makes sense for some people, but for most of us, term is the way to go.

Chris Farrell is economics editor for American Public Media's "Marketplace Money" program. Send questions to: cfarrell@mpr.org, or to kaching@startribune.com; put "Your Money" in the subject line.

What Is Universal Life Insurance?

2008-06-29T12:29:00.000-07:00
Universal Life Insurance is a kind of flexible policy that lets you vary your premium payments. You can also adjust the face amount of coverage. Increases may require proof that you qualify for the new death benefit. The premiums you pay (less expense charges) go into a policy account that earns interest. Charges are deducted from the account. If your yearly premium payment plus the interest in your account earns less that the charges, your account value will become lower. If it keeps dropping, eventually your coverage will end. To prevent that, you may need to start making premium payments, or increase your premiums payments, or lower your death benefits. Even if there is enough in your account to pay the premiums, continuing to pay premiums yourself means that you build up more cash value

Universal Life Insurance

What Are Indexed Annuities Pros And Cons?

Mini Masseuse Pro Series

Mini Masseuse Pro Series EMS Unit

Gold: What Is The Economy Usually Doing When It Goes Up?

How to Forecast Markets Using Technical Analysis

Now is Not the Time to Speculate in Stocks

The Hindenburg Omen -- Omen-ous or Not? Robert Prechter

Hindenburg Omen -- Omen-ous or Not? Elliott Wave International Chief Market Analyst Steve Hochberg Sheds Light on a Feared Technical IndicatorAugust 24, 2010

By Elliott Wave International

Life Annuities Provide Life Annuity Income, But How To Find The Best Rate?

Fidelity 401k Hardship Withdrawals up 20% in Second Quarter.

Elliott Wave - Efficient Market Hypothesis: R.I.P.

Slicing the Neckline: A Classic Technical Pattern Agrees with the Elliott Wave Count

Deflation: First Step, Understand It

Deflation: First Step, Understand It There is still time to prepare if deflation is indeed in our future.August 16, 2010

By Elliott Wave International

7 Ways to Become an Unsuccessful Trader

Q&A with an experienced Elliott wave trader reveals seven common trading mistakes.August 12, 2010

By Elliott Wave International

The Economic Crisis No One Saw Coming: A Convenient Untruth

August 9, 2010

By Elliott Wave International

Stress Test: How to Find the Safest Banks in the U.S. and Abroad

Stress Test: How to Find the Safest Banks in the U.S. and Abroad August 3, 2010

By Elliott Wave International

Technicals vs. Fundamentals: Which are Best When Trading Crude Oil and Natural Gas?

Technicals vs. Fundamentals: Which are Best When Trading Crude Oil and Natural Gas? July 26, 2010

By Elliott Wave International

Quadrillion Dollar Debt: 'Day of Reckoning' Looms - Elliott Wave International

Quadrillion Dollar Debt: 'Day of Reckoning' Looms What Will Happen as $1,000,000,000,000,000 in Global Debt Winds Down?July 22, 2010

By Elliott Wave International

Annuities

Court Remands Rule 151A back to the SEC

Five Fatal Flaws of Trading

Immediate Annuities - Lifetime Income

Equity Index Annuities: Great Idea Or Flawed Flop?

Life Annuity-The Retirement Security Needs Lifetime Pay Act, H.R. 2748

Equity Indexed Annuity: Forbes Article Errors, Omissions and Half-Statements

Equity-Indexed Annuities: A Costly Way To Limit Your Losses

Index Annuities

Index Annuities - The SEC's Annuity Grab

What Are The Benefits Of An Annuity?

Benefits of an Annuity

Tax-Deferred Growth

May Avoid Probate

Lifetime Income

What are the advantages and disadvantages of an Equity-Indexed Annuity?

What are the advantages and disadvantages of a Variable Annuity?

Annuity Surrender Charges and How To Avoid Them.

What Are Advantages and Disadvantages of a Fixed Annuity?

What is a Fixed Deferred Annuity?

Dissent Regarding Final Rule 151A Index Annuities

Traditional Fixed Interest Rate Annuities

What Is Triple Compounding?

SEC Ignores Congressional, State, and Industry Opposition to Indexed Annuity Proposal

Fixed Indexed Universal Life Insurance

Fixed Rate Annuities can’t be seen as asset in determining nursing home assistance.

Variable - Insurers Abandon Rosy View of Variable Annuities

SEC to hear more on fixed index annuity regulation

Fixed Index Annuities

Immediate Annuities - Women's financial security in retirement

Life Insurance - Caution About The Lowest Rates!

What if an instant quote is not right for me because of my special medical history?

FDIC May Need $150 Billion Bailout as More Banks Fail

Do insurance companies treat all tobacco users the same?

Life Insurance - What if I don’t fit into any of these categories?

Failures of SEC Chairman Cox

How stable are life insurance companies?

nsurance industry; AIG insurance policy, annuity holders shouldn't worry

AIG life Insurance

Regulatory Safeguards Offer ‘Insurance Policy’ in Times of Crisis

INSURANCE CONSUMERS PROTECTED BY SOLVENCY STANDARDS

Life Insurance - If I apply and don't get the rate I applied for, what happens?

How long does life insurance application process take?

How do I purchase a life insurance policy?

Life Insurance Information Sources

Universal Life Insurance - How To Protect Your Investment?

Life Insurance Sales Illustrations

Annuities - Protest Rages over EIA Proposal

Hindenburg Omen -- Omen-ous or Not?
Elliott Wave International Chief Market Analyst Steve Hochberg Sheds Light on a Feared Technical Indicator
August 24, 2010

Deflation: First Step, Understand It
There is still time to prepare if deflation is indeed in our future.
August 16, 2010

Q&A with an experienced Elliott wave trader reveals seven common trading mistakes.
August 12, 2010

Stress Test: How to Find the Safest Banks in the U.S. and Abroad

August 3, 2010

Technicals vs. Fundamentals: Which are Best When Trading Crude Oil and Natural Gas?

July 26, 2010

Quadrillion Dollar Debt: 'Day of Reckoning' Looms
What Will Happen as $1,000,000,000,000,000 in Global Debt Winds Down?
July 22, 2010