NU Online News Service, Nov. 16, 12:15 p.m. – Moody’s Investors Service, New York, has published a report by Arthur Fliegelman warning about possible problems with sales and management of equity-indexed annuities.
An equity-indexed annuity is an annuity with a return tied to the return on a stock index, such as the S&P 500 index. Issuers usually offer holders a minimum guaranteed rate of return of at least 1%, to protect the holders against market slumps.
One problem is that carriers and their sales representatives may have done a poor job of telling customers about the risk of market downturns, Fliegelman writes in his report.