I started in the insurance business more than 30 years ago and have been involved in the securities business for more than 25 years. That experience has taught me to be skeptical of the latest product fad in either arena. However, I do stay abreast of industry developments in the event I run across something that I believe can deliver real value to my clients.

With the market downturn of the last couple of years, some insurance companies are putting a pretty big push behind "indexed annuities". You may be hearing a lot of promotion of these insurance contracts, which purport to offer potential equity market participation without the attendant downside. My past review of these products has not found them to be a particularly attractive alternative to the investment vehicles and portfolio strategies I have recommended.

Nevertheless, I did recently attend two meetings focusing on indexed annuities, hoping to take a fresh, informative look at this approach. Unfortunately, the first of these meetings was a distinct disappointment. It was conducted by an insurance agent who had sold over $30 million of indexed annuities last year. The presentation was characterized by oversimplifications or downright misrepresentations about the equity markets and the products themselves.

The second meeting, sponsored by a company with which I have done previous business, was excellent. It covered the history and structure of indexed annuities, monthly averages, annual reset and ratchet methods, participation rates, cap rates, asset fees, surrender charges, exchanging between indexed and fixed contacts, and front-end loads. In short, I got a thorough and constructive review of the strengths and weaknesses of these investment vehicles.

In many states, indexed annuities may be marketed by insurance agents who are not licensed to represent securities investments. And that brings me to the main point of this letter. If you hear about this type of annuity, and it sounds a little too good to be true, there's probably more to the story that what you're hearing. Please don't hesitate to call, and we can evaluate the pros and cons together.