The ads usually have small print with some important conditions. It's common for these ads to state that "deposits exceeding $20,000 may be eligible for yeild other than advertised yield." One ad also states that the "promotional incentive included to obtain yield. We are not a bank, we are an insurance agency offering FDIC insured CDs with a promotional rate to introduce our services and products to potential customers."
So if the 7% APY for 4 months is only guaranteed for the first $20K, the insurance agency may provide some bonus that gets added to the interest that the bank would pay so the effective yield would be 7%. For example, let's say they used Indymac's old 4-month CD that had a 5.25% APY. To get an effective yield up to 7% for $20K, the insurance agency could pay a bonus of about $120 on top of the bank's interest. The bonus would be like what timeshares offer to people to come in and listen to a sales pitch. I think this is the reason why all of these types of offers require you to come into their office.
There are many types of these financial businesses that sell CDs this way. From what I see in ads, they appear to have similar methods in how they act as a middle-man for the banks.
As this Bankrate article describes, most financial planners are against annuities. Also, consumer advocates like Clark Howard often warn people against them.
I've had a few commenters in a previous post who have been pleased with their service from one of these companies:
I spent a little over an hour in their office on my first visit. I think it was due to my skepticism otherwise they could have gotten me out of there sooner. The CD's that I got both matched their advertised rates. For my second CD, I was able to do it over the phone for the most part. They already had my information on file --all I had to do was drop off a check off at their office. No problem. I'm very pleased with the service I received, and will use them again.
So if you do consider taking advantage of one of these CD offers, make sure you don't get pressured into buying something that you didn't intend to buy. If you have bought CDs from these places, please leave a comment about your experience.
Edit 4/06/09: Fixed and/or removed old links.