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Old 10-29-2010, 03:43 PM   #1
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Charpress on Inverse Performance Trigger - Insurance Forum
 
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Inverse Performance Trigger Inverse Performance Trigger
North American has an interesting new product. The usual S&P index, but in any year where the index return is zero or less, then a declared interest rate is credited. Sounds sort of like an income rider with guaranteed rate, but built into the chassis as a loss-protection feature.

I've seen something similar come and go in the past. This is approved in only 12 states so far (including my state). Here's what has me curious:

"When index performance is down, the Inverse Performance Trigger may provide a more favorable earning potential than the current Fixed Account rate."

So, I wonder if the declared fixed rate is, let's say, 2.5%, are they saying the IPT rate will be maybe something like 3%? Like I said, interesting.
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Old 10-29-2010, 04:11 PM   #2
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Inverse Performance Trigger Re: Inverse Performance Trigger
Originally Posted by Charpress View Post
North American has an interesting new product. The usual S&P index, but in any year where the index return is zero or less, then a declared interest rate is credited. Sounds sort of like an income rider with guaranteed rate, but built into the chassis as a loss-protection feature.

I've seen something similar come and go in the past. This is approved in only 12 states so far (including my state). Here's what has me curious:

"When index performance is down, the Inverse Performance Trigger may provide a more favorable earning potential than the current Fixed Account rate."

So, I wonder if the declared fixed rate is, let's say, 2.5%, are they saying the IPT rate will be maybe something like 3%? Like I said, interesting.

It sounds odd.
Is this an allocation option?
It almost sounds like a way to short the index...
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Old 10-29-2010, 05:10 PM   #3
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Inverse Performance Trigger Re: Inverse Performance Trigger Charpress is the thread starter for: Inverse Performance Trigger

Originally Posted by scagnt83 View Post
It almost sounds like a way to short the index...
Well, I think that is exactly what it is. I tried to find out more info online, but their agent guide and consumer brochure aren't there yet. It comes in a 12 year 10% bonus flavor and 8 year 5% bonus flavor. Guess which flavor is sellable and which isn't?

I'm not really sure how many people will be blown away with the idea that you can do a little better than zero. If the S&P returns 0.001%, then I assume you do not get the downside guarantee -it has to be zero or less. There are several index options, including the Hang Seng. Sort of strange. Reading between the lines, you can index where you want other than the S&P, but the S&P is still always used to calculate whether you get the interest trigger. How does that work? You do well on the Chinese index, but because the S&P was a negative, you also get the interest downside protection? Or do you have to index to the S&P -which wouldn't make much sense. Just thinkin' out loud here.

As usual, it boils down to all the other moving parts as to whether it is a decent product to sell. While I was online at their site, I checked on a commission situation. They're showing I was sent $0.00 by EFT last week. Sweet.
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Old 10-29-2010, 06:00 PM   #4
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Inverse Performance Trigger Re: Inverse Performance Trigger
At first I thought this might be a way to "short" the index. If so, that would be cool. Thus, you'd only get the interest if the market was zero or down. If it was positive, no interest that year.
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Old 10-29-2010, 06:32 PM   #5
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padthaiforlunch on Inverse Performance Trigger - Insurance Forum
 
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Inverse Performance Trigger Re: Inverse Performance Trigger
It's a fixed rate if the market is down or flat. Currently 5%.

If the market is down 0.05%, you get 5% on the amount allocated to the strategy. If the market is down 20%, you get 5%.

Reminds me of an anico product that pays a fixed rate if the market is up at all for the year.

Considering the market is down 2 of 10 years, I really don't see this as being a great seller.

The inverse is only for the S&P. Hang Sen index plays the way they normally do.

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A weak mind is like a microscope, which magnifies trifling things, but cannot receive great ones."

--Lord Chesterfield
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Old 01-16-2011, 03:57 PM   #6
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Norwayguy on Inverse Performance Trigger - Insurance Forum
 
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Inverse Performance Trigger Re: Inverse Performance Trigger
Lafayette Life had a product with some of these features the product paid a 2% interest rate years 1-10 3% thereafter and if the market performed better than the minimum they credited the difference as well up to the cap.

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Peter G Langelier
plangelier@langelierinsurance.com http://www.langelierinsurance.com
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