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 Posted: Sun Jan 04, 2009 3:58 am Post subject: |
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Gary,
Here's how Aviva's guarantees work.
| Quote: | On the indexed strategies,
the policy guarantees that the interest credited will never be less than
2% compounded annually over the segment term. The guarantee will be
applied at the end of the segment term or upon lapse, surrender or maturity
of the policy.
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The key statement here is
| Quote: | On the indexed strategies,
the policy guarantees that the interest credited will never be less than
2% compounded annually over the segment term. |
Notice it says never less than 2% compounded annually over the segment term. The 2 % guarantee is a cumulative guarantee over a term. I gave you the 2 bucket example previously to try and help you understand it. At the end of a term, if you earned less than 2% compounded annually, the difference will be credited. This does not mean if you had one down year, you are automatically going to be credited 2% in that year. Feel free to call an Aviva wholesler and ask them.
Just copy and paste this URL in your browser and it will take you to Aviva's brochure avivasuccess.com/images/stories/pdfs/14888.pdf
Just in case you haven't read it. This is where you will find the interest rate guarantee wording that I quoted.
_________________
Victor Suris
www.lifequotesnow.com |
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victor27s
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Posts: 53
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| Posted: Sun Jan 04, 2009 7:20 am Post subject: |
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WoW I just joined this Forum and it looks like this is where the action is!! This thread started with a question about Term Life Insurance and I think the Client left somewhat Confused.
What ever happen to the "BFO" Balanced Funding Option with Ageon Life??
Lets Get Ready To Rummmmble |
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Ins4U
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Location: USA
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| Posted: Sun Jan 04, 2009 9:14 am Post subject: |
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| I think the term insurance is a very useful thing for those who do not afford the premiums and don't go for insurance only for this reason, as it has lowest premium rates. Unfortunately, agents do not promote this. They should at least promote to the people who refuse to take any policies after hearing heavy insurance rates. |
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VIJAYRAJ
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Joined: 11 Dec 2008
Posts: 73
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| Posted: Sun Jan 04, 2009 11:01 am Post subject: |
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The Consumer Product Guide being discussed.
| Quote: | ABOUT AVIVA
Aviva Life and Annuity Company is part of Aviva USA, one
of the fastest-growing life insurers in the United States,
with more than 1,115,000 customers and 32,850 agents
and distributors. We offer a competitive portfolio of long term
savings, insurance and retirement income products
designed to help customers make the most out of life.
Aviva USA is part of Aviva plc, the world's fifth-largest
insurance group, with a corporate lineage dating back to
1696. |
| Quote: | Interest Rate Guarantee
Advantage Builder II IUL provides a guaranteed minimum
interest rate of 2%. On the fixed-term strategies, the policy
guarantees that the declared interest rate will never be less
than 2%. On the indexed strategies, the policy guarantees
that the interest credited will never be less than 2%
compounded annually over the segment term.
The guarantee will be applied at the end of the segment term or upon lapse, surrender or maturity of the policy, whichever occurs first. |
| Quote: | Account Value Enhancement
Beginning with the 10th policy year, Aviva will credit an
annual increase to the Basic Interest Strategy based on the
policy year's average monthly account value (excluding
outstanding loans and interest under the Annually Declared
(Fixed) Loan Interest Option) for that year. The account value
enhancement is guaranteed to be 0.5% per year and is
credited at the end of the year. |
victor27s, just exactly what are you arguing?
Let's pretend a client has $10,000 cash in the policy and his premiums paid cover the cost of insurance and expenses. Also let's pretend the S & P 500 has ZERO positive gains for the next 10 years. At the end of year one (1) his minimum cash value is $10,200. At the end of year five (5) his minimum cash value is $11,041. At the end of year ten (10) his minimum cash value is $12,190.
There aren't two (2) buckets, only in your brain does such a thing exist.
In the policy the client pays in premium, (which is the same as money), then the insurance company subtracts from that money the cost of insurance and expenses, whatever money is left over will get credited a minimum of 2% up to the maximum for whatever indexed strategy was employed.
Obviously if a client selected the two year point to point no indexed credit could be calculated until the end of the two years AND regardless the 2% is still going to be paid, credited, kept track of...etc.
The bogus point you are attempting to make is that they don't actually pay that each and every year.
That's true, they don't, they just keep track. Just like a bank doesn't actually pay out the interest credits on rolled over bank CDs, they send you a Bernard Madoff statement that tells you how much money they'll pay you IF and WHEN you stop by to cash out, (unlike Bernard Madoff)
Now you made this statement:
| Quote: | | If you earn 7% yrs 1-9 and in yr 10 the S&P is negative, this doesn't mean you will be credited 2% that year. |
I've provided the linky to the Consumer Product Guide above. Where in that product summary do you find language that supports your assertion that there would EVER be a ZERO year?
link removed by the moderators as per the TOS.
_________________
Gary Spicuzza, *SAFE
Copyright 1956.
No Rights Reserved.
*Self Appointed Financial Expert |
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GarySpicuzza
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| Posted: Sun Jan 04, 2009 3:27 pm Post subject: |
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Let's use 100k and forget about the cost of insurance in this example, let's just understand the minimum interest rate. If a term is 2yrs, 2% compounded annually over the term would be as follows:
yr 1, 100k x 2% = 102,000
yr 2, 102k x 2% = 104,040 - This is your guarantee over the first 2 yr term, that you will never have less than 104,040 at the end of that term. That's what 2% compounded annually over the term means.
Here's what the guarantee doesn't mean:
yr 1, 100k x 7% = 107,000
yr 2, the market was down so you get 107k x 2% = 109,140 - This is wrong, you don't get the 2% in yr 2, because you already outperformed 2% compounded annually over the 2yr term in yr 1. 107k in yr 1 is already more than 104,040, which is 2% compounded annually over the length of the term.
The explanation on your 3rd party link is incorrect and it is not coming out of any of Aviva's brochures.
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Victor Suris
www.lifequotesnow.com |
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victor27s
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Posts: 53
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| Posted: Mon Jan 05, 2009 6:54 pm Post subject: |
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Victor, allow me to thank you!
Victor wrote:
| Quote: | yr 1, 100k x 2% = 102,000
yr 2, 102k x 2% = 104,040 - This is your guarantee over the first 2 yr term, that you will never have less than 104,040 at the end of that term. That's what 2% compounded annually over the term means.
Here's what the guarantee doesn't mean:
yr 1, 100k x 7% = 107,000
yr 2, the market was down so you get 107k x 2% = 109,140 - This is wrong, you don't get the 2% in yr 2, because you already outperformed 2% compounded annually over the 2yr term in yr 1. 107k in yr 1 is already more than 104,040, which is 2% compounded annually over the length of the term.
The explanation on your 3rd party link is incorrect and it is not coming out of any of Aviva's brochures. |
YOU ARE CORRECT.
 I'm now going to have to change my *SAFE designation to *SAFe 
_________________
Gary Spicuzza, *SAFE
Copyright 1956.
No Rights Reserved.
*Self Appointed Financial Expert |
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GarySpicuzza
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Location: West Pasco County, FL
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| Posted: Mon Jan 05, 2009 7:47 pm Post subject: |
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No problem.
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Victor Suris
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victor27s
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| Posted: Mon Jan 12, 2009 12:53 am Post subject: |
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What would be the point of funding the full single premium UL? If you died the next day, the carrier would take back all of the premium/cash value and pay out the $500k. If the cash value at age 50 was $180k and you died the next day, they take back the $180k and pay out the $500k. If your cash value at age 70 is $450k and you died the next day, they take back the $450k and pay out the $500k. At this point, you have in essence only $50k of insurance (these are just made up numbers, but you get the point).
The client would likely be MUCH better off paying the absolute minimum premium on a UL policy with a no-lapse GUARANTEED death benefit no matter what the cash value is on the policy, and putting the difference into another investment or savings vehicle. This way, if the client dies tomorrow, they get the full $500k and still have the original $70k they would have used for the single premium policy. What would you rather pay - $70k up front, or $2500 each year? If you took $70k up front and earned an extremely low 4% rate of return, you would have ~$227k after those 30 years. Personally, I'd rather have the $500k death benefit plus the remaining balance than just the death benefit.
In general, life insurance should not be mixed with investments. The point of life insurance is to pay a death benefit, not grow your assets. Just my 2 cents. |
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dgoldenz
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| Posted: Mon Jan 12, 2009 6:56 am Post subject: |
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Hi, I don't think these life insurance policies are specifically designed to match up to other investment options. When I think of investing, I'd rather choose a mutual fund that yields optimum returns. Life insurance does have a significance when it comes to the securities of my loved ones. But, thats more about covering up a risk rather than capitalizing on its benefits.
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anonymous00
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| Posted: Sun Apr 12, 2009 11:52 am Post subject: hi |
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term life policy benefit is
you have to less premium and get a better coverage |
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akhi0001
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