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Equity-Linked Certificates of Deposit are a safer, low-cost alternative for those who must have an Equity-Indexed Annuity type of investment. These little-known investments allow you to participate in the growth of th

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

e market index while your principal is guaranteed by the Government. Read on to find out more.

Equity-Indexed Annuities are probably the most heavily promoted investment for seniors in today’s marketplace. The sales

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

Examples of combination products may in

pitch is appealing and the payoff to the agent is very big—up to 13%. The enormous commissions have led to sales abuses which leave seniors holding the bag.

Readers of this column have wised up to the flaws of Equity

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

-Indexed Annuities. But what are the alternatives?

The best alternative to Equity-Indexed Annuities is to use a diversified mix of investments and strategies that can provide an income stream between 6% and 10% while

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

limiting any risk of significant loss. That’s what I do for my clients—without long-term time commitments or surrender penalties if they want access to their money.

Another alternative is called an Equity-Linked Cer

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

Combination pro

tificate of Deposit. They provide virtually all the benefits that Equity-Indexed Annuities are designed to provide, without all the negative strings attached.

Equity-Linked Certificates of Deposit are offered by bank

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

s. They pay a return that is based on a stock market index, usually the S&P 500. Just like all Certificates of Deposit, they are federally insured by the FDIC up to $100,000 per individual. The minimum purchase for an

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

Equity-Linked Certificate of Deposit is usually $25,000, but some can be found with $1000 minimums.

The return is based on the average performance of the S&P 500 over a set period of time. Just like Equity-Indexed A

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

nnuities, how the return is calculated depends on the issuer. The returns are all based on averaging the gains or losses of the index at set points over the life of your contract. Some Equity-Linked Certificates of De

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

posit guarantee a 3% return. Those doing so will limit the index return. Others provide 100% of the calculated index return.

The only way you can lose your principal with an Equity-Linked Certificate of Deposit is if

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

you pull your money out before the end of the term. Most will have some form of a penalty, but since there wasn’t a big commission paid to an agent to sell it, the redemption penalties should be small. (Some don’t all

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

Following aspects would a

ow early redemption so investigate before you invest.) All allow early redemption without penalty if the account holder dies.

One of the major benefits Equity-Linked Certificates of Deposit have over Equity-Indexed A

dd to the challenges in developing combination products:

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

nnuities is a short term commitment, FDIC insurance of principal, and much lower fees. They allows you much more control and flexibility.

For instance, let’s say you intend to invest $75,000 in Equity-Linked Certific

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

ates of Deposit. Instead of putting all the money in a single CD, divide that money between three--purchasing one each year for three years. Then as one comes due you can roll it into another 3-year term. This will re

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

duce the negative effects in how the index returns are calculated while giving you access to $25,000 every year.

There are several disadvantages to Equity-Linked CDs. They don’t normally pay interest until maturity,

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

so these investments are not a good choice of those looking for steady income. And like Equity-Indexed Annuities, you don’t really get 100% of the market gains because of the averaging used in calculating the rate of

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

Professional from academic institutions, pharmaceutical industries, health care indust

return.

You may be wondering why you haven’t heard of Equity-Linked Certificates of Deposit before. In fact, you should wonder why the advisor recommending you buy an Equity-Indexed Annuity hasn’t recommended them! T

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

he reason is they don’t pay a large commission so there isn’t a financial incentive for the advisor to do so.

Check with your local bank to see if they offer Equity-Linked CDs. Not all do, but they are becoming more

.

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

widespread. Any broker or advisor that can sell bonds should also have access to Equity-Linked CDs.

I still believe there are better ways to invest your money than Equity-Linked CDs. But I’d much rather see someone i

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

Companies that provide selfless information through particip

nvest in them than an Equity-Indexed Annuity. Don’t let advisors who stand to gain so much from your money pressure you into investing in an Equity-Indexed Annuity when an Equity-Linked CD is a much better alternative

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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