NY Life 2010 Dividend Interest Rate?

[dgoldenz]

The order depends on whether you count the surplus note in the capitalization ratio calculation. NY Life issued a $1 billion surplus note at the end of last year with interest rate of 6.75% mature in Nov 2039. This was included in the surplus on the consolidated balance sheet in 2009. I agree with the comment that they paid the lowest dividend as % of earnings among the big four.

Full disclosure published 2010’s whole life historical performance report. This report is useful because it shows the actual performance rather than illustrated values.

20 year actual IRR on cash value ($250K DB, male NS preferred, age 45).

NML: 5.11%
Savings Bank Life of MA: 5.11% (anyone knows about this company?)
NYL: 4.17%
Mass Mutual: 3.74%
Guardian: 3.59%

One thing to note is that the more premium it can be put into the policy under the same DB, the higher the IRR if everything else is the same. NML’s premium is the highest, $5815/year. Other companies’ premiums are in the range of $4700 to $4800. SBLM has the lowest premium ($4388) and the highest IRR on CV.

SBLI sells cheap term too, among the cheapest of any company for Preferred Plus cases...

 

[BNTRS]

One thing to note is that the more premium it can be put into the policy under the same DB, the higher the IRR if everything else is the same. NML’s premium is the highest, $5815/year. Other companies’ premiums are in the range of $4700 to $4800. SBLM has the lowest premium ($4388) and the highest IRR on CV.

Umm, huh?

You've stated that NML and SBLI both have IRRs of 5.11% for their old products issued 20 years ago on a 45 year old preferred male. So SBLI does not have a higher IRR it has the exact same as NML, unless you've made a typo.

In other words if I pay 5000 per year for 20 years and have $165k in cash value my IRR is 5% and if I pay $3000 per year and have $99k my IRR is still 5% I'm not better off with the $3000/year premium from a cash value perspective. I've made no more money, nor less, by having one policy instead of the other.

SBLI sells cheap term too, among the cheapest of any company for Preferred Plus cases...

It doesn't even need to be preferred plus. They have cheap term all over the palce. Ohio National does too.

 

[kenbill]

One limitation in the full disclosure report is that they don't use the same premium to calculate the IRR. So if I paid $4388/year for the SBLI product 20 years ago and got 5.11% IRR, I would have gotten higher IRR if I had paid $5815/year for the same DB. My purpose is to check which company's product has the highest IRR based on actual performance rather than illustrated values.

If they can structure the product using paid up addition and compare the IRR based on the same premium and DB, that would be a lot more useful. I didn't state this clearly in the prior post, but that's what I mean.

 

[nycagent]

absolutely kenbill - that's my point as well. the cost of insurance for the same person is ultimately the same no matter what the company charges for it, so that means that $1427 extra per year is 'excess premium' going straight to the investment component. You really need the same face value AND premium to run a legitimate comparison.