Why we only sell 'safe-money' products

A variable annuity is a security under federal law. Variable annuities are registered with the SEC under the Securities Act of 1933 and the Investment Company Act of 1940, and they can only be sold by representatives who hold a securities license (FINRA Series 6 or 7) and are affiliated with a broker-dealer. A prospectus is required.

A fixed annuity is an insurance product, regulated by state insurance departments. It is sold by licensed insurance producers under each state's insurance code, with carrier disclosures filed with the state rather than the SEC. There is no securities prospectus.

Two different regulators. Two different licensing regimes. Two different bodies of disclosure. Same word — "annuity" — on the cover.

Inside a variable annuity, your premium is allocated among sub-accounts that look and behave very much like mutual funds. Sub-account values rise and fall with market performance. You can lose principal in a variable annuity — the contract value moves with the underlying sub-accounts.

Variable annuities typically carry layered fees: mortality and expense (M&E) charges, administrative charges, sub-account expense ratios, and optional rider charges. Total annual costs commonly land in the 2-4% range before any rider, and prospectus disclosure is required for that exact reason.

Variable annuities can be the right tool when the goal is tax-deferred market exposure with optional living-benefit riders, and when the all-in cost is understood and accepted. They are not within Pebyl Financial's licensing or scope.

Inside a fixed annuity (MYGA, FIA, SPIA, fixed deferred annuity), the carrier — not the market — sets the credited interest or the income payment under the contract. The carrier holds the underlying investments on its general account and bears the investment risk; you have a contractual claim for what the contract promises.

There are no sub-accounts, no fund expense ratios, and no daily NAV. There is a carrier, a state insurance department regulating that carrier, and a contract.

Risk doesn't disappear — it shifts. Instead of market risk on sub-account performance, your risk is the carrier's claims-paying ability and, in the case of FIAs, the carrier's discretion to set caps, spreads, and participation rates at renewal within the contract minimums.

We are licensed insurance professionals. We are not registered representatives, not investment adviser representatives, and not affiliated with a broker-dealer or RIA. We do not sell securities, mutual funds, ETFs, or variable annuities, and we are not licensed to give investment advice on those products.

This isn't a marketing position. It's a licensing reality, and we'd rather be honest about the boundary than pretend otherwise. If a variable product or a securities-based plan is right for your situation, we will say so and direct you to a licensed fiduciary or advisor who can help.

Both fixed and variable annuities are governed by IRC §72 for federal income tax purposes. Non-qualified contracts grow tax-deferred, withdrawals are taxed LIFO (gain first), and the 10% early-withdrawal penalty applies before age 59½. Inside an IRA, IRA tax rules apply.

The product wrapper changes the investment mechanics, the licensing required to sell it, and the regulator. The §72 tax framework is largely the same.

A simple test: ask for the document. If you are handed a prospectus, you are looking at a variable annuity (or a registered indexed-linked annuity, which is a securities product structured to look index-linked but with potential for principal loss). If you are handed a state-filed disclosure document and a contract specifications page, you are looking at a fixed annuity.

Also ask the licensing question directly. "Are you offering this as a fixed insurance product or a security?" The answer determines what protections, disclosures, and standards of conduct apply.