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Author: Rayvt Big gold star, 5000 posts Top Favorite Fools Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75540  
Subject: Re: Hi gang... wow!!! Date: 9/17/2013 12:44 PM
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"IUL: $586,000"
The IUL is much more than that. Go look at my illustration.
https://dl.dropboxusercontent.com/u/8644020/2013-09-13%20T

EOY 40 = $769,585 at 100% of the S&P account's principal and reserves.
What's the S&P account do on principal without its requisite reserves?


I looked at your illustration, and also downloaded it. Too back I can't cut/paste to import the numbers into Excel. ;-(

Frankly, it's typical insurance company illustration garbage. Even though it has a disclaimer, it is so misleading that it borders on fraud.

It shows the account getting a steady return of ~8.8% per year, and ignores the fact that some years get 0% and some years get 12% (the floor & cap). This is just lying with statistics.
Yet the fact is (for all 12 month periods for every anniversary month, from 1950 to 2013):
* 30% were 0%
* 43% were 12%

* 47% were between 0% and 8%
* 53% were between 8% and 12%

* 56 times (7.5%) two years in a row had 0%
* 9 times (1.2%) three years in a row had 0%

On the good side:
* 128 times (17%) two years in a row had 12%
* 42 times (5.6%) three years in a row had 12%

You can't just ignore this variance and call it a steady 8%. That's financial malpractice.
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