Somewhere there is a well-known "scenario" that discusses the concept that if you lose 10% in the stock market, how much do you have to make in coming years... to match the guy who gets 4% guaranteed tax free... say in a whole life plan or a fixed annuity.
Anyone know the stats that I'm talking about? My bet is some of you experienced life guys know.
Not exactly sure what you're looking for but you could do a simple chart in excel to compare the scenarios. Is that what you mean?
Well... yeah.. I could do that if I were a rocket scientist in math. Somewhere out there is a narrative that explains to people that market risk is more than what it seems.... that a 10% decline in your holdings means that it takes forever t catch up.
Well... yeah.. I could do that if I were a rocket scientist in math. Somewhere out there is a narrative that explains to people that market risk is more than what it seems.... that a 10% decline in your holdings means that it takes forever t catch up.
Al
I've seen it too Al but I can't remember where. I think Americo has a pretty nice brochure about indexing that may help you but it's not exactly what you're looking for.
Somewhere there is a well-known "scenario" that discusses the concept that if you lose 10% in the stock market, how much do you have to make in coming years... to match the guy who gets 4% guaranteed tax free... say in a whole life plan or a fixed annuity.
Anyone know the stats that I'm talking about? My bet is some of you experienced life guys know.
Thanks,
Al
The problem with that type of comparison is that you aren't comparing apples to apples. From a long term growth perspective, I'll take the stock market over a whole life policy every day of the week. If someone is out there comparing a whole life policy to investing in the market, they are doing a disservice to the potential client.
As far as your scenario goes, if you lose 10% one year, you have to make a little over 11% to get back to where you were before the 10% drop.
I've seen it too Al but I can't remember where. I think Americo has a pretty nice brochure about indexing that may help you but it's not exactly what you're looking for.
Yes, this scenario is used in "illustrations" of FIA vs. investing in mutuals.
On the subject of WL vs. the market, while I agree with another poster that statistically the S&P has historically out-performed ANY insurance plan, very few people buy the S&P for life. I don't know the stats, but if you had the entire S&P for the last 4 years, how would it compare to fixed annuity or perhaps an accum-UL?
I'm looking at the argument on protection of capital with the ability to provide coverage against catastrophic loss (i.e. death/disability) AND has SOME upscale earnings ability... even if very tiny.
People I talk to are more interested in safe-money vehicles as opposed to going after the big brass ring... and taking the risk that goes along with that.
Someone has a terrific illustration of how a market loss of two or three years in a row makes it difficult to catch up in the later years... and how long it will take.
I'm not trying to start the old WL vs VUL or FIA argument... I'm just looking for this illustrative sales "pitch."
On the subject of WL vs. the market, while I agree with another poster that statistically the S&P has historically out-performed ANY insurance plan, very few people buy the S&P for life. I don't know the stats, but if you had the entire S&P for the last 4 years, how would it compare to fixed annuity or perhaps an accum-UL?
Again, not a fair comparison. In addition, WAY too short of a window. Four years with a UL and you're still in the surrender charge period. As for the S&P 500 over the last 4 years, the unmanaged S&P 500 would have netted an average annual return of 7.72% (from 06/01/2004 through 05/31/2008). Better than any UL or fixed annuity. In addition, I would hope that wouldn't be a persons sole investment in their portfolio. Surely they would have investments in other asset classes to make sure they are properly diversified.
I agree that when nearing retirement, it's time to get a little more conservative. However, eliminating all equities from one's portfolio could cause them to run out of money. And taking someone's nest egg and dumping it into a UL is a poor idea in my opinion. Using a UL or WL policy for building wealth or creating income should begin much earlier in life. And only after all other retirement vehicles are fully funded.
Well... yeah.. I could do that if I were a rocket scientist in math. Somewhere out there is a narrative that explains to people that market risk is more than what it seems.... that a 10% decline in your holdings means that it takes forever t catch up.
Al
I havent done anything with Allianz for years but that type of presentation/brochure used to be part of their collection of EIA sales material.
Winter
------------------------------------ Spending Our Way to Prosperity
The basic point is that thirty percent of 100 is more than 30 percent of 70. Therefore, when you lose thirty percent of 100, you need to earn a higher percentage of the remaining 70 to get back to where you were.
The basic point is that thirty percent of 100 is more than 30 percent of 70. Therefore, when you lose thirty percent of 100, you need to earn a higher percentage of the remaining 70 to get back to where you were.
THANK YOU. I knew there would be a math guru here. It is so simple. I thought it was going to be a long and complex calculation!
What I want to find is the 20 year spreadsheet that shows two cases: The first with $100,000 losing 4% in years 1, 3, 7, 10, 14, 15, 19 and gaining 8% in the other years.... verses the cash value in a single pay "accum" UL designed to accumulate cash value with a min interest rate of 3.5% and a possible (non-guarantee) of 4.5%. (I can run an illustration on Winflex to show that one.)
I know a lot of upscale people in their 40s to early 50s who have lost their a$$ in the equities market and will want to xfer some (not all!) of their holdings to something like insurance that will build them some (even if not a lot) of wealth and also provide protection in case they assume room temp (to use Rush's line.)
Believe it or not, very few of these folks have EVER been called by a life agent. I'm amazed. This is an area of some 3,000 homes of $400K or more... and no one "farms" it. MoO just moved their district office there... the one I work out of. I live just across the river (but not in a van!) about a mile away in Fair Oaks which every agent their dog markets too!
I'm looking for some easy-to-understand "numbers" to make the case that while no permanent insurance policy is likely to "beat" or "meet" the market, there ARE possibilities where permanent is NOT the worst place people can put some of their nest egg (as opposed to term... or buying the latest fad fund touted by some hyped-up TV or radio clown.)
Any help is appreciated from some of you older/wiser/experienced life guys. (Has "James" left the group?)
Al
PS: I'm not trying to start or engage in a debate of life vs market or VUL. I just want some numbers I can put on a poster and show people as a "possibility" of what could happen... not necessarily what WILL happen over the next 20 years.
Here is a sample that will self-destruct if if had not been lookaed at within 7 days. Please look ha how it is set up and how the formulas work, so you can replicate. If you save it. you can get different results by changing the beginning amount or any of the interest rates.
THANK YOU. I knew there would be a math guru here. It is so simple. I thought it was going to be a long and complex calculation!
What I want to find is the 20 year spreadsheet that shows two cases: The first with $100,000 losing 4% in years 1, 3, 7, 10, 14, 15, 19 and gaining 8% in the other years.... verses the cash value in a single pay "accum" UL designed to accumulate cash value with a min interest rate of 3.5% and a possible (non-guarantee) of 4.5%. (I can run an illustration on Winflex to show that one.)
I know a lot of upscale people in their 40s to early 50s who have lost their a$$ in the equities market and will want to xfer some (not all!) of their holdings to something like insurance that will build them some (even if not a lot) of wealth and also provide protection in case they assume room temp (to use Rush's line.)
Believe it or not, very few of these folks have EVER been called by a life agent. I'm amazed. This is an area of some 3,000 homes of $400K or more... and no one "farms" it. MoO just moved their district office there... the one I work out of. I live just across the river (but not in a van!) about a mile away in Fair Oaks which every agent their dog markets too!
I'm looking for some easy-to-understand "numbers" to make the case that while no permanent insurance policy is likely to "beat" or "meet" the market, there ARE possibilities where permanent is NOT the worst place people can put some of their nest egg (as opposed to term... or buying the latest fad fund touted by some hyped-up TV or radio clown.)
Any help is appreciated from some of you older/wiser/experienced life guys. (Has "James" left the group?)
Al
PS: I'm not trying to start or engage in a debate of life vs market or VUL. I just want some numbers I can put on a poster and show people as a "possibility" of what could happen... not necessarily what WILL happen over the next 20 years.
At the point they diversify their portfolio. Let's face it, the only people investing 100% of their nest egg in one index are usually do it yourselfers who are chasing the latest and greatest. If they aren't willing to educate themselves or learn from an adviser, then they deserve exactly what they get.
The same goes for those that invest only in fixed instruments. They have the safety of principal, but may lose purchasing power due to inflation. Again, a good reason for having some of your portfolio in the equities market.
Here is a sample that will self-destruct if if had not been lookaed at within 7 days. Please look ha how it is set up and how the formulas work, so you can replicate. If you save it. you can get different results by changing the beginning amount or any of the interest rates.
Thank you. I saved it and will endeavor to learn from it.
This is an EXAMPLE of why the forum can be so valuable... that people will freely exchange ideas and tools that work for them with the whole community.
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