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Author: synchronicityII Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75791  
Subject: Re: Hi gang... wow!!! Date: 9/21/2013 11:13 PM
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OF COURSE it does!
A. how the company invests in its general account determines how much budget they have to buy the option spreads. The higher the available budget, the higher the floor & caps they can buy.
B. how the dividends affect the option pricing determines how much the budget buys OF the option spreads. The lower the net cost of the participation spread, the higher the floor & caps they can buy.

This is all handwaving BS, Dave. All you're saying is that the return the insurance company gets using whatever is in their investment account will factor into how generous they can be with caps and floors.

That is, simply, a separate issue from THE WAY THE COMPANY CREDITS THE ACCOUNT, which is EXPLICITLY stated in the contracts to reflect THE CHANGE IN THE INDEX, period. No more, no less. It explicitly DOES NOT include dividends. Period. If you can SUPPLY SOMETHING FROM A COMPANY THAT ISSUES IULs which states that the dividends ARE included in the calculation, please do.

I'm calling you out on this because you are making a statement that is directly in contradiction to every item I've ever read from a company that issues an IUL, including what is specifically stated in the Allianz brochure. I normally would not do so, unless you can show me otherwise, you are stating something that is explicitly misstating the terms of the contract. I will retract this statement if you can show me a contract that shows am IUL which credits the account with changes in the index AND the dividends.

(I will note, again, that I am withholding any opinion on the suitability of an IUL for any particular individual).

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