Regulators are beginning to take a closer look at annuities that link investment returns to stock indexes.

The National Association of Insurance Commissioners is planning to study these newfangled fixed annuities to determine if separate regulations are needed to protect consumers.

The issue is whether banks and other purveyors of insurance are doing an adequate job explaining to their customers the risks these annuities carry. The group's study could result in tougher disclosure rules and stricter licensing requirements.

"This product has a significant cost attached to it, so the customer darn well better understand what he's buying," said Dwight Bartlett, commissioner of the Maryland Insurance Administration and chairman of the commissioners group's committee on life insurance.

Liked fixed annuities, index annuities guarantee an investor's principal as well as a minimum rate of return. But what makes these products different is that they try to take advantage of the stock market's gains by mimicking stock indexes, in most cases Standard & Poor's 500.

Insurance companies have been aggressively hawking these products to banks, which sell them to customers anxious to cash in on the market's upswing. If stocks continue to rise, insurance sales executives say these annuities will become the most popular sellers on their menus next year.

"The index annuity is the talk of the town," said William Busler, president of the financial markets division at Aegon USA Inc.

The conclusions of the insurance commissioners will no doubt affect insurance companies and have implications for banks.

Regulators are likely to conclude that index annuities are more sophisticated than fixed annuities, so the people who sell them must complete stricter licensing requirements. The insurance commissioners may also toughen disclosure requirements about how the products work, Mr. Bartlett said.

One problem with index annuities is that every insurance company means something different when it says its product tracks the S&P 500. Some watch the S&P's performance on all the anniversary dates during a contract's duration. They then base the customer's payout on the single date the S&P performs the highest.

Others take an average of the S&P's performance during a contract's duration.

Furthermore, customers don't always get 100% of an index annuity's payout. Many insurers offer only 80% or 90% of the S&P returns, which could confuse and even enrage customers.

These products have become the rage among insurance companies, which believe they have constructed the perfect vehicle for novice investors who watched last year's phenomenal growth in the stock market and want to get in on the action.

Aegon, Security First Group, and Life Insurance Co. of the Southwest are among those that will roll out new products next year.

Whether these products will generate high sales through banks remains to be seen. "Maybe one-fourth of this stuff is being sold through banks, but that's probably pushing it," said Jack Marrion, president of the Advantage Group, a consulting firm in St. Louis.

Indeed, Kenneth Kehrer, a Princeton, N.J., consultant who tracks sales of these products said the jury is still out on their success.

Keyport Life Insurance Co. was far and away the top seller of index annuities this year. During the first nine months of this year, its KeyIndex offering generated $100 million in sales or half of its total fixed annuity sales.

Others haven't done nearly as well, according to Mr. Kehrer's data. Far behind in second place was Lincoln Benefit Insurance Co., which sold only $63 million worth of index annuities. And Glenbrook Life and Annuity Co. finished third, with a paltry $1 million.

Most other companies didn't roll out their products until the third quarter, so they haven't generated enough to register on the radar screen, Mr. Kehrer said.

But the index annuities may not turn out to be the big sellers the vendors anticipate. If the stock market dives, then these products lose their attraction. Moreover, many investment representatives have found them too complicated to explain, Mr. Kehrer said.

"Banks have to determine if this is a product that will add sales or cannibalize sales of other products," Mr. Kehrer said.

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