American Skandia CEO Supports SEC Alert; Stands Up for VA Industry; Dokken Clarifies Remarks On Deceptive Sales Practices.Business Editors SHELTON, Conn.--(BUSINESS WIRE)--June 12, 2000 The chief executive of American Skandia Incorporated took a stand today in support of the S.E.C. warnings issued last week, calling a new on-line brochure a timely industry guidebook that is "right on the money" in its efforts to keep life insurers from deceptive sales practices. American Skandia CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Wade Dokken issued a statement in response to the S.E.C.'s on-line alert, which maintains that it is inappropriate to sell variable annuities Variable annuities Investment contracts whose issuer pays a periodic amount linked to the investment performance of an underlying portfolio. as part of a qualified retirement savings plan Noun 1. retirement savings plan - a plan for setting aside money to be spent after retirement pension account, pension plan, retirement account, retirement plan, retirement program, retirement savings account , based on any promised tax benefit. In agreeing with the S.E.C.'s remarks, Dokken said variable annuities funding 401(k) plans and other qualified plans are "appropriate, but not as a tax advantage." Dokken further explained: "Variable annuities offer qualified plans many advantages including multiple asset classes, a wide range of investment options, asset allocation Asset Allocation The process of dividing a portfolio among major asset categories such as bonds, stocks or cash. The purpose of asset allocation is to reduce risk by diversifying the portfolio. programs, exchange privileges, death benefits, fixed accounts and annuitization rights. The tax deferral tax deferral The delay of a tax liability until a future date. For example, an IRA may result in a tax deferral on the amount contributed to the IRA and on any income earned on funds in the IRA until withdrawals are made. of the variable annuity Variable Annuity An insurance contract in which, at the end of the accumulation stage, the insurance company guarantees a minimum payment. The remaining income payments can vary depending on the performance of the managed portfolio. is immaterial to the qualified plan sale," he said. Dokken also clarified his hard stance against companies who may be using deceptive practices in selling bonus products in variable annuities. American Skandia, which introduced the bonus product, XTra Credit, to the industry, does not have an additional charge for its bonus product, but does have a longer surrender charge by one year and a higher surrender penalty in the initial year. Other companies have created new fee structures that nullify nul·li·fy tr.v. nul·li·fied, nul·li·fy·ing, nul·li·fies 1. To make null; invalidate. 2. To counteract the force or effectiveness of. any benefit. "That amounts to 'charging' for a bonus product, rather than offering a discount in the form that our product intended," Dokken said. American Skandia Marketing, Incorporated, a leading distributor of insurance and retirement products in the U.S., ranked first in total variable annuity sales for the first quarter of 2000, according to two leading industry trackers, The Variable Annuity Research and Data Service (VARDS) and Tillinghast's VALUE Survey. For more information on American Skandia, visit the company's award-winning Web site at www.americanskandia.com. Variable insurance products are issued by American Skandia Life Assurance Corporation. Mutual funds are issued by American Skandia Advisor Funds, Inc. All products are distributed by American Skandia Marketing, Incorporated, Shelton, CT. |
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion