Sellers of the products formerly known as equity indexed life insurance and annuity contracts are trying to do a better job explaining their business to the public.
The National Association of Fixed Annuities, Milwaukee, has released a major “white paper” describing the products and their place in consumers’ portfolios, and NAFA members are working with the Insurance Marketplace Standards Association, Bethesda, Md., to develop standard rules for educating prospective purchasers of the products.
NAFA, which prefers to refer to the products as “fixed indexed annuities” and “fixed indexed life insurance” policies, recently held a press conference here to unveil the white paper and talk about why its members believe fixed indexed products can play an important role in improving Americans’ retirement income security.
In the past, “NAFA has sponsored educational conferences and responded to prevalent misinformation in many forums and publications,” NAFA Chairman Michael Tripses said at the NAFA press conference. “We have proactively disseminated information about fixed annuities to the media. However, we felt it was time to coalesce what we felt were all of the salient issues surrounding FIPs into one document which could be a resource for all of our publics.”
NAFA moved 7 months ago to commission Joan Boros, a NAFA director, to draft the white paper.
Boros, a partner at Jorden Burt L.L.P., Washington, worked on the paper together with Gary Cohen, another Jorden Burt attorney, as well as with Tripses, NAFA Executive Director Kim O’Brien and other NAFA leaders.
The authors write in the white paper about the value of fixed indexed products as vehicles for enabling retirement savers to share in some of the growth of the stock market without risking the kind of devastating loss of principal that hit some retirees in 2000 and 2001.
“Fixed indexed insurance products are nothing more than a traditional fixed insurance product that offers owners an opportunity, often on an optional basis, to receive interest based on positive changes in a financial markets index, coupled with insurance guarantees of purchase payments and minimum rates of interest,” the authors of the white paper write.