Jackson Insurance Reps Can Now Sell Bank CDs, Too

“After last years devastating financial performance, people increasingly have expressed preference for products that offer safety, security, guarantees of principal, lower or no volatility, FDIC insurance, comfort, and familiarity.”

He refers to recent Federal Reserve data showing that deposits to CDs rose by 249% in January 2001 compared to January 2000, and deposits to savings accounts rose by a whopping 1,154% in the same month-to-month comparison. (See chart.)

“Furthermore, a recent survey of adults, conducted by The Gallup Organization from Nov. 20, 2000 to Dec. 23, 2000, found that over half of the people who make household financial decisions took FDIC insurance into account when considering recent investments.”

Studies like that spurred Jacksons interest in making FDIC-insured CDs available through its financial reps.

The company decided to offer an equity-linked CD along with a fixed-interest CD as an option for clients who want “the stability of a conventional CD with the ability to earn a potentially higher rate of return,” says JFB President and CEO D. Tad Lowrey.

In this product, he says, people can “receive a rate of return linked to the S&P Index, without putting their retirement money at risk.”

It works like this: If the S&P goes up by the end of the CD period, the CD will credit interest according to a percentage of growth in the index. But if the S&P has not risen, or if it has even dropped, by the end of the CD period, Jackson guarantees the owner will get the initial principal back. (Note: If the owner cashes out before maturity, the cash-outs may be subject to penalty.)

The amount of interest credited is based on an “index participation rate.” Like participation rates in many equity index annuities, this rate is declared at issue and guaranteed not to change for the CD term. On May 10, 2001, the participation rate was 70% for the five-year CD, 75% for the 7-year CD, and 80% for the 9-year CD.

JNB measures growth in the S&P by comparing the S&P value at CD issue to the S&P value at maturity (i.e., S&P values averaged over the last 52 weeks).

Currently, nearly 2,000 financial reps have signed up to sell the JNL CDs. To do so, they must pass JNLs information screens and background checks and also pass Jacksons own certification course (self-study or seminar).

Ten states require distributors to have a Series 7 license to be able to sell the MarketPath CD. Two other states require a Series 6 or Series 7 license to sell both MarketPath and SurePath, “because they are viewed more like brokered CDs in those states,” notes Blowers.

State insurance agent licenses do not impose any special requirements related to CD distribution, however, Bowers says.

Agents who write directly with Jackson receive “referral fees” for the MarketPath CD. These pay 3% on the five-year CD, 4% on the seven-year CD, and 5% on the nine-year CD.

Reproduced from National Underwriter Life & Health/Financial Services Edition, June 4, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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