Volatility Control Indexes (VCIs)

If you are NOT familiar with VCIs, NOW is a good time to do so.

Many Fixed Indexed Annuities (FIAs) are using VCIs in an effort to increase the rate of return on their products. The S&P 500 has become expensive to hedge and with returns from income-producing bonds being low (which is used to buy options on the measuring stock index), it’s forced insurance companies to seek better returns from VCIs.

A good way to learn how VCIs work is to read Roccy DeFrancesco’s VCI white paper. Click here to do so.

Illustrate Par Rate FIAs and Volatility Control Indexes in OnPointe Risk “light”

Using Fixed Indexed Annuities (FIAs) as an asset class is nearly a no-brainer these days. The following chart compares a classic 60/40 stock-to-bond blend to a 60/40 stock-to-FIA blend (one using a Volatility Control Index (VCI) and one using no cap but only a 35% participation rate).

The above chart is one that can be created with the OnPointe Risk Analyzer software (full edition and light/insurance agent-only version). OnPointe was recently updated to allow advisors to illustrate FIAs with any PAR rate and any VCI index.

If you are not using OnPointe Risk Analyzer to help make more sales and provide more suitable advice to clients, you should be. Click here to learn more about OnPointe Risk “light” and why you should be using it with EVERY client.