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Rising interest rates are another reason to avoid Equity-Indexed Annuities. If you are retired or near retirement, don’t let yourself be talked into purchasing an Equity-Indexed Annuity. If you do, it could easily be

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

a decision you regret for many years to come.

I’ve been called ‘a lone voice in the wilderness speaking out’ about the dangers of equity-indexed annuities. It seems that everywhere you turn there is an advisor or ins

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

rance agent telling you an equity-indexed annuity is the greatest thing since sliced bread. Don’t believe them.

I’ve talked at length in other articles about the hidden dangers in Equity-Indexed Annuities. You can fi

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

d those articles at www.guardingyourwealth.com, but the 3 main reasons are (1) they needlessly require you to lock up your money for a very long time, (2) the majority of your returns are still based on the stock mark

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

t and (3) the commissions for selling an Equity-Indexed Annuity are so high it creates a tremendous conflict of interest for those recommending them. Rising interest rates are just one more reason. Let me explain.

Eq

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

ity-Indexed Annuities eliminate your flexibility and control over YOUR money. In today’s post-9/11 world where terrorism is a very real threat, it’s important that you have the ability to make changes to and access al

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

of your money when you need to—without incurring surrender penalties that can be as high as 20%! Locking your money into an Equity-Indexed Annuity for 10-15 years causes you to lose control of all but a small portion

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

of it. Equity-Indexed Annuities don’t offer enough reward in exchange for such a long-term commitment.

The main selling point of an Equity-Indexed Annuity is the ability to participate in the return of the stock mark

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

t but have a ‘guarantee’ that your money will earn at least 3%. The performance of these investments is designed to come from the stock market, not the guarantee. If you are willing to invest in the stock market, I fe

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

l there are better ways to do so which provide downside protection while allowing you to retain complete control and flexibility. (Contact me for more information.)

Rising interest rates is another reason you shouldn

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

t invest in an Equity-Indexed Annuity. Over the past 3 years, the thought of earning a 3% fixed return on your money didn’t sound too bad. Certificates of Deposit at the local bank have only been paying 1% or 2%. That

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

s made it difficult for those relying on that income to meet their monthly needs. Equity-Indexed Annuity salespeople have used this as a main selling point.

But things have changed. The Federal Reserve recently incre

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

sed the Federal Funds interest rate by one quarter of one percent. That may not sound like much, but it’s the first time they’ve raised rates in four years. They also signaled that the economy is heading in the right

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

irection and that they’ll continue to raise interest rates over the next few years as necessary to keep inflation in check.

The interest rates available on Federally Insured Certificates of Deposit (CDs) have already

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

risen significantly. You can earn almost 2.5% on a 1-year CD and over 3% on a 2-year CD. The futures markets project that Federal Funds interest rates could be as high as 3% by the end of 2005. That’s means it is like

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

y that you’ll be able to get a 1-year CD for over 4% and a 2 or 3-year CD for 5%.

Think about it—if you can earn 5% on a short-term, Federally-insured Certificate of Deposit, why would you want to lock your money up

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

or 10 to 15 years with a guarantee of only earning 3%? Especially if you’d have to pay a penalty that could be as high as 20% to get at more than just a small portion of it! It just doesn’t make sense.

For those need

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

ng income, now is the time to be patient. Use short-term investments like Certificates of Deposit that mature in 1-year or less. When they come due, chances are rates will be significantly higher and your patience wil

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

be rewarded.

If you’d like me to answer specific questions about your financial situation, feel free to email me at jeff@guardingyourwealth.com or call 1-877-827-1463. I regularly respond to readers’ questions and w

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

uld be happy to answer yours.

Mr. Voudrie is a Certified Financial Planner, nationally syndicated newspaper columnist and President of Legacy Planning Group, Inc., a Private Wealth Management Firm in Johnson City, TN

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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