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re: Northwestern Mutual - Should I?
Posted on 8/21/14 at 3:16 pm to GoCrazyAuburn
Posted on 8/21/14 at 3:16 pm to GoCrazyAuburn
I don't think that question has a general applicable answer. I think each individual needs to value the components of return, death protection, and risk reduction individually. The answer is a sliding scale for the policy purchaser.
I can tell you that I don't expect them to pay worthwhile rates of return for a long time given the current market and economic environment. Insurance companies live and die by their ratings and their ratings are largely determined by their reserves. They want to make more money on their investments than they have to pay out in terms of returns and they want to protect their reserves. With the current interest rate environment most of the fixed income portfolios of insurance companies are looking at future returns in their fixed income investments in the neighborhood of 2-3%. This spills over directly to the policy holder returns.
I can tell you that I don't expect them to pay worthwhile rates of return for a long time given the current market and economic environment. Insurance companies live and die by their ratings and their ratings are largely determined by their reserves. They want to make more money on their investments than they have to pay out in terms of returns and they want to protect their reserves. With the current interest rate environment most of the fixed income portfolios of insurance companies are looking at future returns in their fixed income investments in the neighborhood of 2-3%. This spills over directly to the policy holder returns.
1
Posted on 8/21/14 at 3:18 pm to Maderan
It was a completely hypothetical question. You can see no return that would make it a possibility for some people to buy it, instead of saying nobody should ever buy it?
If you are defending that WL is a smoke and mirrors product, is it because of the contractual nature of it or its performance?
Hypothetically speaking, what return would be acceptable to make WL not a smoke and mirrors product? If the notion is that nobody should get it, what would make it so it is acceptable to buy?
The investment performance of the company is only a 1/3 of what goes into the performance of these products (generally speaking).
If you are defending that WL is a smoke and mirrors product, is it because of the contractual nature of it or its performance?
Hypothetically speaking, what return would be acceptable to make WL not a smoke and mirrors product? If the notion is that nobody should get it, what would make it so it is acceptable to buy?
quote:
With the current interest rate environment most of the fixed income portfolios of insurance companies are looking at future returns in their fixed income investments in the neighborhood of 2-3%.
The investment performance of the company is only a 1/3 of what goes into the performance of these products (generally speaking).
This post was edited on 8/21/14 at 3:21 pm
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