Per an article in Investment News:
Indexed annuities are a type of fixed annuity that tracks a market index, such as the S&P 500. Some observers however are concerned about a surge in products using a “hybrid” market index.
Critics say such indices are less transparent and more difficult to understand than well-known alternatives such as the S&P 500. They also contend hybrids don’t offer more of a financial benefit than a traditional market index.
Ronald Grensteiner, the president of American Equity Investment Life Insurance Co., among the top five sellers of indexed annuities, summed up concern on a recent company earnings call.
“We believe proprietary indices add another level of complexity to a safe money insurance product and do not offer a significant growth advantage,” Mr. Grensteiner said.
“By contrast, the S&P 500 is a “transparent public index with 60 years of history that a policyholder can easily track,” he said.
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