October Fed Action Could Impact Fixed Annuity Rates

AnnuityScout.com CEO Yost Reacts to Speculation that Greenspan & Company Will Cut Interest Rates

Marina Del Rey, California, UNITED STATES

MARINA DEL REY, Calif., Sept. 6, 2000 (PRIMEZONE) -- For weeks, there has been speculation that the Federal Reserve Board (Fed), led by Chairman Alan Greenspan, might raise short-term interest rates at their next meeting October 3, 2000. Now, The Wall Street Journal (September 5, 2000) reports there is "growing talk that the next move by the Fed would be to cut, not raise rates." Up until a few weeks ago a rate hike, not a rate cut, was anticipated.

Tuesday's Journal cites employment data released last Friday, which indicated the economy might be slowing. (The Labor Department said nonfarm employment dropped by 105,000 in August, a larger decline than anticipated. The National Association of Purchasing Management also reported that "manufacturing activity contracted" during August for the first time since February 1999.)

Whether or not fixed annuity rates are impacted by the Fed's decision will depend largely on the reaction of the bond market. To this point, the Journal stated "the bond market took off like a rocket on all the news of a slowing economy, which would help keep inflation under wraps." While there is not a strict correlation between fixed annuity rates and bond market activity, the two are linked. An increase in bond prices was evidenced in reaction to Friday's news; such a reaction often leads to a drop in fixed annuity rates for new purchases.

"In the last month and a half, we've seen a continuing decline in fixed annuity rates," said Gregory G. Yost, chairman and CEO of AnnuityScout.com, a company that represents more than 50 highly-rated insurance carriers. "In July, we had a number of annuities offering guaranteed rates in the 7.5 percent range. These same products are now at 7.0 percent or less. No one can predict which direction rates will go in the future, but there is evidence that rates could continue to fall. We are encouraging our clients who are considering a fixed annuity purchase and believe that rates are dropping to act right away." Consumers can visit the Web site at www.AnnuityScout.com or contact the call center at 1 (800) TAX CUTS for more information on the highly competitive products currently offered.

Fixed annuities offer a guaranteed rate of return for a given time period with the added advantage of tax-deferral. AnnuityScout.com offers tax-deferred annuities with some of the most competitive rates available anywhere. While many fixed annuities offer a one-year guaranteed return rate and couple it with an extended surrender period (leaving buyers "locked in" without knowing what the eventual rate of return will be), all of the fixed annuities featured on the AnnuityScout site have guarantee periods that match the surrender periods. For example, a fixed annuity with a five-year surrender period has an interest rate guaranteed for five years. AnnuityScout currently features fixed annuities with rates up to 7.35 percent for six years and 7.00 percent for five.

AnnuityScout.com Is An Independent Annuity Marketplace

AnnuityScout.com is the Web's leading, independent annuity marketplace representing more than 40 highly rated insurance companies. Unlike single-carrier, single-product sites, AnnuityScout is able to maintain its independence from any one company, placing its priorities on the needs of clients. Offline, the company has a state-of-the-art call center, fully staffed with nationally licensed Annuity Specialists. AnnuityScout encourages customers who prefer to speak with a live representative to call in with any questions regarding annuities or specific products.

About AnnuityScout.com: "Annuities Done Right"

AnnuityScout.com is an independent annuity service for both consumers and the company's business-to-business alliances. Located at www.AnnuityScout.com, AnnuityScout is the leading online marketplace for no-load annuities. Representing more than 50 insurance companies, the comprehensive AnnuityScout "supermarket" is designed to offer products direct to those consumers who want more value from their annuities. AnnuityScout's proprietary technological platform enables the company to efficiently service the needs of its business-to-consumer clients and its business-to business alliances both on and offline. The state-of-the-art AnnuityScout call center is staffed with nationally licensed Annuity Specialists. AnnuityScout.com is a free service of Independent Advantage Financial and Insurance Services, Inc. (IAF). Founded in 1987, IAF has facilitated the purchase of more than $1 billion in annuities and high-end life insurance direct to the consumer through marketing alliances and other endorsements. AnnuityScout.com is headquartered in Marina Del Rey, California and can be reached at 1 (800) TAX-CUTS (829-2887).

About the Annuities Industry

LIMRA International (an independent service that monitors the insurance industry) reports overall annuity sales (combined variable and fixed annuities) grew from $98.5 billion in 1995 to (an estimated) $155 billion in 1999. This represents an average annual growth rate of 12 percent. Variable annuity sales have shown even greater growth. According to The VARDS Report (an independent service that monitors the variable annuity sales), the variable annuity market has grown from $51 billion in 1995 to $121 billion in 1999, a compound annual growth rate of 19 percent. First quarter 2000 sales for variable annuities reached $35 billion (The VARDS Report), a trend that could make 2000 a record year for variable annuity sales and could push the overall market past $200 billion. The independent Gallup Report estimates there are 11.6 billion current annuity owners "on line" (defined as annuity owners who regularly use the Internet and e-mail).

Licensed employees of Independent Advantage Financial and Insurance Services, Inc. dba AnnuityScout.com, are registered representatives of, and securities are sold through, Sentra Securities Corporation, a registered broker-dealer, member NASD/SIPC.

Variable annuities are sold only by prospectus, which contains complete information on charges, expenses and risk factors. Prospective investors may obtain a free prospectus by contacting AnnuityScout.com at 1 (800) TAX CUTS (829-2887). The prospectus should be read carefully before investing or sending money.

Variable annuities involve investment risks including the possible loss of principal. An investor's contract, when redeemed, may be worth more or less than the original investment amount.

Annuities are designed as long-term retirement savings vehicles. Earnings withdrawn prior to age 59 1/2 may be subject to a 10 percent federal tax penalty. Individuals should consult their tax advisor for questions regarding their particular situation.