Did you know?

I was recently taking some continuing education and came upon this interesting bit of information.  Citing is directly from Reged.com California continuing education requirement.


The use of annuities gained popularity in the 1930s. This interest grew as a result of a decrease in interest rates and a desire for individuals to ensure a safe and certain income. In 1933, there were approximately 300,000 annuity contracts in force in the United States, a number that paled in comparison with the seventy million life insurance contracts in force at that time. Initial problems for insurers with the annuity market were associated with mortality as individuals were living longer than anticipated   This, combined with a continued decline in interest rates, resulted in losses. As a result, insurers were forced to deplete their assets as they made annuity payments in sums that far exceeded their initial predictions. Additionally, at first annuities promised a stable (but typically unspectacular) income to be paid for as long as the individual lived. The expectation of the stable income was eventually influenced (and some would say enhanced) by the introduction and growth of mutual funds in 1924. Even with the stock market crash of 1929 and the Great Depression’s negative impact on the growth of mutual funds, there were 68 mutual funds still available in 1940, with $448 million in assets owned by nearly 300,000 shareholders. Following WWII, equity securities gained popularity. Once individuals began to see greater returns available through investment in these securities, a demand grew for the same returns from products such as life insurance and annuities. This demand led to the introduction of variable annuities.  


The variable annuity was developed in response to the demand for equity-based products, as well as to fight the effects of inflation on fixed annuity programs. The first variable annuity in the United States was introduced in 1952 by the College Retirement Equities Fund (CREF). It was not long until variable annuities became popular; however, their issuance was temporarily stopped in 1959 after the Supreme Court ruled that variable annuities were subject to federal securitiesregulation.   It is this ruling you have to thank for securities registration requirements, specifically Series 6 and Series 7. Persons selling variable annuity contracts must be registered with The Financial Industry Regulatory Authority (FINRA) and pass either a Series 6 or Series 7 securities licensing examination. Once there was a licensing mechanism in place and insurers complied with this licensing, sale of these products resumed.  

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