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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 76106  
Subject: Re: Hi gang... wow!!! Date: 9/18/2013 5:51 PM
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Oh, and the cost to reduce the bumpiness? About $440,000. That's a big cost to solve a problem that volatility is willing to fix for you for free after a few years.

Another way of looking at it is the classic "efficient frontier" type of thing - calculate the standard deviation of IUL returns (obviously taking the parameters for a specific product from a specific company), find a mix of, say S&P and bonds (VTSMX and VBMFX, for example) that has the same standard deviation, and then see what the IRRs are for both strategies.

-synchronicity
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