IULs returns that are calculated on indexes that have dividends, include dividends in the returns. If dividends were to increase on that index, the caps would increase, This whole discussion is pointless and non-productive.The credit that is applied to an IUL is quite clearly specified in the brochures and contracts. Point-to-point change in the index (price only, excluding dividends), "Any positive change from the previous year, up to the cap (which is subject to change on annual basis), is credited to the policy. If the total is negative, the indexed interest for that year will be zero."This is what I implemented in my spreadsheet. I coded up the description of what the various IUL bochures from several different companies all said. In fact, I originally had it wrong and Dave corrected me, so I corrected the spreadsheet accordingly.We can argue all we want about how the company sets the cap -- but that is immaterial. The policy gets the point-to-point annual change in the index, up to the cap. If the company feels magnanimous and sets to cap to 99%, the amount credited *still* excludes dividend -- because that's what the policy says.=========I tend to approach these things from an engineer's point of view. Check the inputs and the outputs. Is the output different depending on the presence or absense of input X?Here's the way I would have questioned the actuary. Simple and succinct.Situation: Suppose that on Jan 1, 1998 the S&P500 index was 1000, and on Jan 1 1999 the index was 1050. Today is Jan 2, 1999.Q1: If the S&P had paid 1% dividend in 1998, what amount would be credited to the account?Q2: If the S&P had paid 5% dividend in 1998, what amount would be credited to the account?Everything I've read says that the answer is 5%, for both Q1 & Q2.I believe Dave contends that answers would be 6% for Q1 and 10% for Q2.What does Dave say?What does Allianz's actuary say?
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