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?

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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Posted by Maderan

Member since Feb 2005

807 posts

Posted on 8/21/14 at 3:37 pm to GoCrazyAuburn

I don't think it is a smoke and mirrors product. I think it is a product that makes sense for some people who have no appetite for risk and are looking for guaranteed returns.

As the rate of return in the WL policy goes up the rate of return you can achieve outside of the policy does as well so it will always remain a relative relationship.

In a hypothetical scenario where they were unrelated I would be happy with 8% or better as the guaranteed rate. I don't think WL really has to stand on its own as an investment though as there is a value that is relative to each policy purchaser that can't be quantified in the death protection and guaranteed returns.

What are the other 2/3s of the return component?

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