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12-14-2010, 01:39 PM
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#61
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Thinks s/he gets paid by the post
Join Date: Oct 2004
Location: LaLa Land
Posts: 4,698
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Yup, and that's where I learned to stay away from people like that.
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12-14-2010, 01:41 PM
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#62
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
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You are funny............
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
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12-14-2010, 01:47 PM
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#63
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Thinks s/he gets paid by the post
Join Date: Oct 2004
Location: LaLa Land
Posts: 4,698
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Yeah? Am I funny, Ha Ha or funny Peculiar?
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12-14-2010, 05:38 PM
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#64
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Dryer sheet wannabe
Join Date: Aug 2008
Posts: 22
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Quote:
Originally Posted by TJAY
Dgoldenz, the product is American Equity’s Bonus Gold with the LIB rider.
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Hi TJAY,
I know you said that you had the info you were looking for already so I may be too late, but I looked up this product and the info I see varies drastically from what you mentioned. All of the literature I can find on this product references the minimum return as being 3% per year, instead of 8%.
Here is one of the links I found via google for reference.
http://agent.american-equity.com/doc...disclosure.pdf
There also appears to be some fine print that states they have the right to lower the maximum return to 4% at any time. So your worst case scenario (aside from the company's insolvency) would be that you could have earned a higher return with a 10 year T-Bill and avoided the commissions/fees.
I'm not saying these products are good or bad, just trying to dig into the specifics a bit. I'm actually trying to keep an open mind and research them to see if any annuities make sense for my parents (without dealing with the salesmen), so thank you for bringing this up.
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12-14-2010, 07:03 PM
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#65
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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Quote:
Originally Posted by uofmbish
Hi TJAY,
I know you said that you had the info you were looking for already so I may be too late, but I looked up this product and the info I see varies drastically from what you mentioned. All of the literature I can find on this product references the minimum return as being 3% per year, instead of 8%.
Here is one of the links I found via google for reference.
http://agent.american-equity.com/doc...disclosure.pdf
There also appears to be some fine print that states they have the right to lower the maximum return to 4% at any time. So your worst case scenario (aside from the company's insolvency) would be that you could have earned a higher return with a 10 year T-Bill and avoided the commissions/fees.
I'm not saying these products are good or bad, just trying to dig into the specifics a bit. I'm actually trying to keep an open mind and research them to see if any annuities make sense for my parents (without dealing with the salesmen), so thank you for bringing this up.
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I did not want to say it, but I cannot help myself: IMO, this is a really sleazy and financially shaky company. If you want to buy this awful product, buy it from someone else.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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12-14-2010, 07:53 PM
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#66
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2006
Posts: 7,733
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Quote:
Originally Posted by uofmbish
Hi TJAY,
I know you said that you had the info you were looking for already so I may be too late, but I looked up this product and the info I see varies drastically from what you mentioned. All of the literature I can find on this product references the minimum return as being 3% per year, instead of 8%.
Here is one of the links I found via google for reference.
http://agent.american-equity.com/doc...disclosure.pdf
There also appears to be some fine print that states they have the right to lower the maximum return to 4% at any time. So your worst case scenario (aside from the company's insolvency) would be that you could have earned a higher return with a 10 year T-Bill and avoided the commissions/fees.
.
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It seems to me that minimum per page 9 is 1%. The chart on the last page shows a 3% minimum but that is for a product index 5 which is no longer being sold.
Here is the ultimate irony in what is undoubtably one of the worse decades ever for the stock market. Simply putting creating a $100K portfolio by putting $50K each in Vanguard Total Stock and Total Bond markets would have given you more money than American Equities best annuity (159K vs 157K). The difference would have almost certainly been larger if you followed the couch potato portfolio and rebalanced annually.
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12-14-2010, 08:16 PM
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#67
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,361
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If something seems too good to be true it is. 8% guaranteed is too good to be true. Run.
American Equity. Run faster.
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12-15-2010, 08:13 AM
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#68
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Confused about dryer sheets
Join Date: Dec 2010
Posts: 9
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I’m seeing some misinformation, or at least incomplete information, regarding the details of this particular annuity. There is a rider, called the Lifetime Income Benefit Rider that alters the American Equity contract significantly. The link above does not contain the details of this rider where the 8% compounded growth on the income account is guaranteed. You guys are correct about the very low minimum guarantee on the Base Contract Value. But you need to read the fine print on the rider, not just on the base contract, before concluding that it’s a bad deal.
I’m not saying that I’m thrilled with the financial stability of American Equity, they just happen to be the ones offering the best deal. There are several highly rated, well established companies offering similar products, with slightly lower growth and payout percentages, that I am considering. As far as whether or not FIA’s in general are “too good to be true”, I was hoping to get some knowledgeable feedback and real life experience from people who have used this product. I’ll keep looking.
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12-15-2010, 08:53 AM
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#70
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,021
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Quote:
Originally Posted by TJAY
As far as whether or not FIA’s in general are “too good to be true”, I was hoping to get some knowledgeable feedback and real life experience from people who have used this product. I’ll keep looking.
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As you say it appears no one here has any first hand experience. You might want to ask yourself why that is the case.
Is it simply randomness and it just so happens no one here owns this particular insurance product? Or do those who bought it not want to own up? Or perhaps the analysis by many of us led us to an understanding that "too good to be true" is an accurate description?
Just sayin'...
__________________
Numbers is hard
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12-15-2010, 08:56 AM
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#71
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
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Quote:
Originally Posted by TJAY
I’m not saying that I’m thrilled with the financial stability of American Equity, they just happen to be the ones offering the best deal.
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I wonder if there's any cause-and-effect going on here...
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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12-15-2010, 09:06 AM
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#72
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Full time employment: Posting here.
Join Date: Nov 2009
Location: VA
Posts: 923
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Quote:
Originally Posted by ziggy29
I wonder if there's any cause-and-effect going on here...
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The highest rates are always from the companies with lower financial ratings (usually A- with AM Best), but that's part of the game. There's a reason New York Life and other A++ companies don't offer guaranteed income riders on their annuities, and if they did, would be much lower payouts. ING has an A rating and comes pretty close to the payout offered by AE as they have a 7% compound income rider, but pay out 6% at age 70 instead of 5.5% with AE. I would trust ING over AE with my money for the long term, especially when the contract has a 16-year surrender period, while ING's is 10 years...
__________________
Disclaimer - I am an independent insurance agent. If the above message contains insurance-related content, it is NOT intended as advice, and may not be accurate, applicable or sufficient depending on specific circumstances. Don't rely on it for any purpose. I do encourage you to consult an independent agent for insurance-related advice if you have a question that is specific in nature.
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12-15-2010, 10:32 AM
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#73
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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Quote:
Originally Posted by dgoldenz
I would trust ING over AE with my money for the long term,
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So would I, but I still would not buy an insurance product from ING.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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12-15-2010, 10:35 AM
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#74
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Full time employment: Posting here.
Join Date: Nov 2009
Location: VA
Posts: 923
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Quote:
Originally Posted by brewer12345
So would I, but I still would not buy an insurance product from ING.
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Any particular reason? Their life insurance rates are some of the lowest around with pretty aggressive underwriting. Just curious.
__________________
Disclaimer - I am an independent insurance agent. If the above message contains insurance-related content, it is NOT intended as advice, and may not be accurate, applicable or sufficient depending on specific circumstances. Don't rely on it for any purpose. I do encourage you to consult an independent agent for insurance-related advice if you have a question that is specific in nature.
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12-15-2010, 10:47 AM
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#75
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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Quote:
Originally Posted by dgoldenz
Any particular reason? Their life insurance rates are some of the lowest around with pretty aggressive underwriting. Just curious.
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I know the company very well (past insider status). I would not do business with them.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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12-15-2010, 10:51 AM
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#76
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Full time employment: Posting here.
Join Date: Nov 2009
Location: VA
Posts: 923
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Quote:
Originally Posted by brewer12345
I know the company very well (past insider status). I would not do business with them.
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Alrighty, I'll leave it at that then...
__________________
Disclaimer - I am an independent insurance agent. If the above message contains insurance-related content, it is NOT intended as advice, and may not be accurate, applicable or sufficient depending on specific circumstances. Don't rely on it for any purpose. I do encourage you to consult an independent agent for insurance-related advice if you have a question that is specific in nature.
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12-15-2010, 03:13 PM
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#77
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2006
Posts: 7,733
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Quote:
Originally Posted by TJAY
I’m seeing some misinformation, or at least incomplete information, regarding the details of this particular annuity. There is a rider, called the Lifetime Income Benefit Rider that alters the American Equity contract significantly. The link above does not contain the details of this rider where the 8% compounded growth on the income account is guaranteed. You guys are correct about the very low minimum guarantee on the Base Contract Value. But you need to read the fine print on the rider, not just on the base contract, before concluding that it’s a bad deal.
I’m not saying that I’m thrilled with the financial stability of American Equity, they just happen to be the ones offering the best deal. There are several highly rated, well established companies offering similar products, with slightly lower growth and payout percentages, that I am considering. As far as whether or not FIA’s in general are “too good to be true”, I was hoping to get some knowledgeable feedback and real life experience from people who have used this product. I’ll keep looking.
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Well that rider is pretty confusing. {Deleted incorrect info}
As dgoldenz has pointed out EIA/FIA haven't been around very long mid 2000 before they starting taking off. Even the study that you linked to discusses accumulated contract values, not the important information which what are what actually monthly payments. Right now the vast majority of these policies are in the accumulation stage. I suspect the real howls we will here will be in 5 or 10 year. This iswhen people think they can withdraw 15K a year for the rest of their life and find out they can actually only take out 6-8K.
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12-15-2010, 03:37 PM
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#78
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Full time employment: Posting here.
Join Date: Nov 2009
Location: VA
Posts: 923
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Quote:
Originally Posted by clifp
Well that rider is pretty confusing. I hope you noticed the * in their case study where their growth rate is a hypothetical one. My interpretation is that riders don't actually increase the amount of money available in your contract, only the amount of money you can withdraw each year.
When the money you have withdrawn from your policy via you lifetime income benefits exceeds the contract value of your policy your LIB stops even if you and/or your wife are still living. The term lifetime is deliberately deceptive in my opinion.
The only way to get a true lifetime benefit is to annuitize your policy when you turn 70.5. It seems in the worse case you are looking at the 1% minimum growth rate of the policy. So in 11 years you are looking at $111,600 (perhaps less fees and expenses not sure about that). At that time you can withdraw your $15K a year like you want the catch is after 7 or 8 years the money runs out and you have $0. Even if you assume that policy value increases at more reasonable rate of say 5% you'll still run of money in a dozen or so year at 15K/year
As dgoldenz has pointed out EIA/FIA haven't been around very long mid 2000 before they starting taking off. Even the study that you linked to discusses accumulated contract values, not the important information which what are what actually monthly payments. Right now the vast majority of these policies are in the accumulation stage. I suspect the real howls we will here will be in 5 or 10 year. This iswhen people think they can withdraw 15K a year for the rest of their life and find out they can actually only take out 6-8K.
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I think you are misunderstanding how the lifetime income rider works. Even when the cash accumulation account is drawn down to $0, the company will continue paying the lifetime income benefit for life at the same amount that it was before the accumulation account value was $0.
Think of the policy as two buckets - one with the accumulated value and one with the income account value. The income account is guaranteed the 8% increase, the accumulation account increases are determined by the crediting method (usually tied to the S&P 500, subject to a cap). The accumulated value is what you can walk away with after the surrender period. The income value is how the lifetime payment is determined as it is based on a percentage of that value. When you start taking annual distributions from the lifetime income rider, the accumulation account is reduced annually by the amount distributed via the income rider.
When the accumulation account is reduced to $0, distributions continue at the same rate as before, but when you (or you + spouse if joint annuity) die, there is nothing left. If you die while there is still an accumulation value available, the accumulated value passes to the beneficiary. That is how an income rider is different from annuitization. You could also choose to annuitize instead if interest rates were to increase in the future and that presented a better option at the time.
It's easier to explain on paper, hopefully that makes sense.
__________________
Disclaimer - I am an independent insurance agent. If the above message contains insurance-related content, it is NOT intended as advice, and may not be accurate, applicable or sufficient depending on specific circumstances. Don't rely on it for any purpose. I do encourage you to consult an independent agent for insurance-related advice if you have a question that is specific in nature.
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12-15-2010, 04:06 PM
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#79
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2006
Posts: 7,733
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Quote:
Originally Posted by dgoldenz
I think you are misunderstanding how the lifetime income rider works. Even when the cash accumulation account is drawn down to $0, the company will continue paying the lifetime income benefit for life at the same amount that it was before the accumulation account value was $0.
Think of the policy as two buckets - one with the accumulated value and one with the income account value. The income account is guaranteed the 8% increase, the accumulation account increases are determined by the crediting method (usually tied to the S&P 500, subject to a cap). The accumulated value is what you can walk away with after the surrender period. The income value is how the lifetime payment is determined as it is based on a percentage of that value. When you start taking annual distributions from the lifetime income rider, the accumulation account is reduced annually by the amount distributed via the income rider.
When the accumulation account is reduced to $0, distributions continue at the same rate as before, but when you (or you + spouse if joint annuity) die, there is nothing left. If you die while there is still an accumulation value available, the accumulated value passes to the beneficiary. That is how an income rider is different from annuitization. You could also choose to annuitize instead if interest rates were to increase in the future and that presented a better option at the time.
It's easier to explain on paper, hopefully that makes sense.
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No that makes sense, and that is consistent with the example. I was confused when it said that payments stop when IAV becomes zero due to excess withdrawals. They do say the LIB don't count as excess withdrawals but....
I still remain skeptical that there isn't a catch in the 8% income rider especially given the short time of these products.
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12-15-2010, 04:10 PM
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#80
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Full time employment: Posting here.
Join Date: Nov 2009
Location: VA
Posts: 923
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Quote:
Originally Posted by clifp
No that makes sense, and that is consistent with the example. I was confused when it said that payments stop when IAV becomes zero due to excess withdrawals. They do say the LIB don't count as excess withdrawals but....
I still remain skeptical that there isn't a catch in the 8% income rider especially given the short time of these products.
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Keep in mind that the "8%" number really could be anything. They could make it 9% and have a 5% withdrawal rate instead of 5.5%, or make it 10% and make the withdrawal rate 4.5%, or make it 5% and have an 8% withdrawal rate, as long as the payment comes out the same way. If they made it 15% and the withdrawal rate was 1%, the 15% would look great in a marketing piece, but wouldn't change the payout a dime. They probably use 8% because it sounds like a realistic number. In reality, they can play games with the payout rate any way they want.
__________________
Disclaimer - I am an independent insurance agent. If the above message contains insurance-related content, it is NOT intended as advice, and may not be accurate, applicable or sufficient depending on specific circumstances. Don't rely on it for any purpose. I do encourage you to consult an independent agent for insurance-related advice if you have a question that is specific in nature.
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