Moreover, investors need protection from marketing efforts that color a non-registered equity indexed annuity as an investment. Registered equity indexed annuities are sold through a distribution system of registered representatives and licensed broker dealers. In addition to this distribution network, advertising that briefly describes product features and directs potential investors to a registered representative and prospectus is necessary to remain competitive with the non-registered products. Issuers opting to register equity indexed products should not be penalized for such registration by unduly limiting their ability to advertise. If issuers of registered equity indexed annuities are prohibited generally from describing their products in advertisements to increase public awareness and direct potential investors to a registered representative and prospectus, they would be discouraged from registering.
Equity indexed annuities contain features of traditional insurance and investments.
The decision to register needs to be made on a case by case basis. Products that rest in the center of the product spectrum may present difficult choices. In our case, we felt the prudent choice was to register the VFL equity indexed annuity as a security under the Act. In contrast, issuers of non-registered equity indexed annuities routinely produce detailed advertisements touting both the investment and insurance features of the product. . The Commission should clarify the limitations on the advertising of registered equity-indexed annuity products.