Lloyds of Lubbock
Guru
- 755
Even at a zero your cash value is going backwards.
Even a slight margin call is a very tough conversation with a client.
Even a slight margin call is a very tough conversation with a client.
Pacific Life Policy Performed 22%
- Thread starter GSantos
- Start date
- 5,002
For sure, but many focused solely on the sizzle at time of sale don't tend to concern themselves with anything less than best case or better scenarios
Lloyds of Lubbock
Guru
- 755
Mike Tyson said, "fight plans are great...until you get punched in the face".
It is kind of like premium finance illustrations they look great until..........
It is kind of like premium finance illustrations they look great until..........
- 10,808
Dang Allen. You want me to actually work and investigate this pos product... lmao. jk
OK. You are correct. Its a fee not a spread.
But the policy still has a 0% index floor. Without that, its a variable policy not an indexed policy.
Look at 2008. Index is negative, and the negative returns shown are exactly the fees charged.
So the index floor is 0%.
Then the poilcy has a 7.5% fee.
Then the policy has normal COI/Policy Load/Admin.
So -7.5% is not the worst case, its -7.5% plus policy costs.
That is a gigantic amount of risk transfered to the policy owner. Great for Pac Life!! Their marketing dept are f*cking geniouses in the worst way possible.
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- 10,808
How about a couple of sideways years at 1% that actually produces a -5%+ return?
How would that punch feel on a "low risk product"?
What could go wrong with that??
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- 5,002
Ok, I am back to feeling better about myself in my understanding.
Wasn't there talk of an AG 49B for IUL illustration because of the belief that these products were somehow deceptive to consumers, especially because so many agents still use the talk of not losing any money related to index, etc.
Funniest part is agents licensed to sell insurance of any kind in CA have to have their CA license number in legible font size, but these marketing promo documents & illustrations can discreetly hide the fact that your policy could lose 7.5% minimum in years where the stock index was flat
- 10,808
Glad to hear it! Sorry, I just didnt look over the material that closely. You can pay me enough to sell a Pac IUL, said that for years. And that is just so out there for any index product, had I not seen it with my own eyes I probably would not have believed it.
Yes. They are considering revising AG 49A.
49A focused on regulating assumed Caps/Spreads/PRs. And on traditional indexes.
That is why the multipliers and bonsues and hybrid indexes suddenly appeared overnight in the IUL market. It was a way to get around AG49a and illustrate higher than what the S&P w/Cap illustrated.
Now the advisory board is tasked with regulating multipliers and bonsues. Ensuring they do not illustrate higher than the S&P w/Cap (which is what actuarial assumptions are based off of). They also are looking at the hybrid indexes and how the prescribed algorithm is affected by them. (since they smooth out returns some say it games the intent of the math)
Expect to see multipliers and bonuses disapear or greatly reduce when AG 49B is passed. Which will be a HUGE win for consumers imo. Im sure they will find other loopholes that will create other unintended consequences. But that can be fixed too.
Never expect an index option to perform better long term than the S&P 500 w/ Cap option. Its what the actuaries plan the policy around generally speaking. You can bet your premium those hybrid indexes will see major adjustments in the future to bring returns in line with the S&P 500 w/ Cap option over a 30 year period.
[EXTERNAL LINK] - NAIC subgroup tees up another crackdown on IUL illustrations
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- 10,808
Wow. I cant get over that Pac Life index switcheroo. What a FU to policy holders!!
Ive seen and heard about some sh*t in this industry. But SUPRISE, WE ARE CHANGING YOUR 0% FLOOR POLICY AND NOW YOU ARE AT RISK OF A 7.5%+ LOSS EACH YEAR!
Happy 2023!!
What a horrible thing to do to policy holders.
That is a guaranteed class action suit. Write it down, mark my words.
Allen needed a magnifying glass to see that fine print about a 7.5% Fee!!
Ive seen and heard about some sh*t in this industry. But SUPRISE, WE ARE CHANGING YOUR 0% FLOOR POLICY AND NOW YOU ARE AT RISK OF A 7.5%+ LOSS EACH YEAR!
Happy 2023!!
What a horrible thing to do to policy holders.
That is a guaranteed class action suit. Write it down, mark my words.
Allen needed a magnifying glass to see that fine print about a 7.5% Fee!!
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- 5,002
But the person that posted the info sure seems to like it. Do you think the poster:
A. Isn't aware
B. Believed only what told by upline or wholesaler
C. Doesn't look that deep into details to know the recipe
D. Knows & doesn't care because it helps close the sales
E. Poster is an up line or wholesaler
F. All of the above
- 10,808
If I remember the thread correctly (I dont feel like reading through it) he owns that policy. And he became an agent through that process.
I would say:
A, B, & C
And some people just believe the market will never get out of this bull run. They didnt personally experience 1997-2009 (1% annualized return). 1970-1980 was a 2% annualized return. They simply do not understand the risk. Think about a decade of 1% returns with a 7.5% fee + policy costs. The net loss would easily be over 5% a year. Guaranteed lapse.
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