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URL:  http://boards.fool.com/hi-ray-how-much-is-that-5-spread-out-over-20-30622461.aspx

Subject:  Re: Strategy comparison S&P500 vs. IUL [rev 1] Date:  4/4/2013  6:44 PM
Author:  Dwdonhoff Number:  71709 of 78166

Hi Ray,

How much is that 5% spread out over 20, 30, 40 years?
Quite a lot, actually. Compounding over a period of several decades has a far more major effect than people generally realize.

It is true that a one-time 5% fee compounded forward grows large... but the 2-3% ongoing annual fees/costs required to get the same zero-floor market gains outside an IUL compound to dramatically more than the 5% one-time compounded.

If we're not going to compare feature apples-to-apples, why not just bury cash in a coffee can... its free *AND* safe?

I wonder, though, if that 17% is contractually guaranteed.
The 17% figure she's brought up at Allianz is on a blended index of several markets. The structured options have significantly lower premium costs and their internally hedged returns outperform the S&P options alone.

The caps are held as high as the markets force them. Every carrier is subject to;
a) attracting new business,
b) keeping as much cash value inside existing business,
c) avoiding lawsuits by an unhappy customer base declaring ungrounded unfair dealing.

Carriers *have* tried to bring existing books of established contracts down in caps below the competitive insutry norm, only to face an onslought of litigative hell... from which all of the industry has observe