Total Return Fixed Annuities Are Not EIAs
National Underwriter (Life/Health) (09/11/00) Vol. 104, No. 37 p.31; Howard, Lee

Total return fixed annuities (TRFAs) are often confused with equity indexed annuities (EIAs). Both products do guarantee principal and minimum interest. TRFAs and EIAs are also market performance-driven. However, this is the extent of their similarities. TRFAs are deferred fixed annuities supported by actively managed bond portfolios. The portfolios, which include convertible bonds, are geared toward rewarding the customer. They reward customers with a "total return" of the portfolio, net of transaction costs. Confusion between the two products is due in part to various sales materials. Many TRFA marketing tools show one or more past performance figures of major bond indices, leading some investors to incorrectly conclude that the supporting investment portfolio is connected to an index. In reality, the investment portfolio is an actively managed portfolio of securities.


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