When dividends are strong, they reflect in more attractive option performance per cost, allowing the IUL company to buy a spread with higher caps. Nobody is surrendering the dividends of the securities of the underlying positions.IOW, the ins. co. gets the benefit of the dividend. It's just that they get it in the form of a lower price on the option instead of paying a higher price and getting the dividend in cash.The form doesn't matter. The final result is that *they* get the [benefit of] the dividend, not the policy holder.And they are up-front about it. They don't try to hide it, they say right up front that "dividends are excluded when calculating the index return."It's just that (most) people don't realize what that means and the huge effect it has.Dave, you won't ever be convinced (cue the Upton Sinclair quote "It is difficult to get a man to understand something when his salary depends upon his not understanding it.").::shrug:: These are an expensive instruments, sold to financially unsophisticated people, using sweet words -- "Stock market return without stock market risk" -- while rifling their wallets. By the time they realise (if they ever do) what's been done to them, the seller is long gone.
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