Originally Posted by emptyeternity
I would like to compare different guarantee periods' prices with other ul/wl prices.
How much growth do you see the 10 year treasury having? I don't see it going up ever. The interest on the debt would balloon and sink us instantly, which is why they are keeping rates low. Bernanke has signaled his willingness to expand qe to eternity and inflate the money supply then drive rates up and our debt in turn. Atleast with the former method he can let the politicians and his bank friends dance the jig and loot sovereign wealth funds while the ship sinks...
I havent done many comparisons yet. LFG claims that it is a lower priced alternative. We will see.
This is my personal opinion, and not advice, but I do see rates being increased eventually. Most likely not within the next 5 years, at least not significantly. But in the next 10 to 20 years for sure.
Remember that with a GIUL we are talking a 20-50 year time horizon.
Bernanke will not be there forever. And over the next 5 years there will be many pressures on the Fed to bring up rates (there already are).
Look at historical rates for this country. We have been high, low, and everywhere in between. I dont think we will see 1980s rates again anytime soon; but who knows?
Bottom line is that our country can not keep rates this low forever if we are to keep a stable economy.
, the only real reason we can do so right now is because the rest of the worlds economy is just as messed up as us. And since we are still the world super power, we are seen as the safe haven currency. So investors put up with low rates for the safety of the Dollar.
Eventually, when the world economy smooths out a bit, other countries/investors will not have as much of a need for putting money in a safe haven currency.
So to keep our currency relevant we will be forced to gradually raise Treasury rates.
Bottom line is that if you think the US or World economy is doomed, then you are probably in the wrong line of business since the products you sell rely on the stability of the US Currency to pay their Guarantees.
Back to rates; the major point is that there is nowhere really for them to go but stay the same or go up.
The way I see this product, you know your guarantee if they do stay the same, and if they do go up everything else is gravy.