Unequivocal rebuttal. (Comment).In the January January: see month. 2002 article "Anticipating the Benefits" (page 66), the authors attempt to compare historical yields of participating whole life vs. universal life products. While, in general, I think the authors provided adequate caveats to their conclusions, I think that a statement toward the end of the article was somewhat misleading. They said, "financial-services professionals claiming the unequivocal superiority of participating whole life should understand that, on average, about 300 basis points per year (over 10 years) are sacrificed when choosing participating whole life over universal life. Decisions between participating whole life and universal life bereft of this information are, by definition, uninformed decisions." While it's it's 1. Contraction of it is. 2. Contraction of it has. See Usage Note at its. it's it is or it has it's be ~have true that such unequivocal claims should not be made, I think that the rest of this statement is itself a little too unequivocal. I am not a defender of either participating whole life or universal life, but I can think of several caveats that should be considered before claiming that the choice of a particular product design is the important driver in a customer's expected yield. For example: * I believe that universal life policies tend to be sold with more selective underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. classes and, thus, they attract more preferred risks. * Participating policies probably tend to be older and smaller, and they tend to use portfolio vs. new money interest-crediting schemes more often. * I would also expect that a greater proportion of the universal life products analyzed an·a·lyze tr.v. an·a·lyzed, an·a·lyz·ing, an·a·lyz·es 1. To examine methodically by separating into parts and studying their interrelations. 2. Chemistry To make a chemical analysis of. 3. were still being sold during the period. It is likely that market forces for currently sold products tend to keep credited values higher than for products no longer being sold. I think the results reported overstate the differences and that comparison of product designs is not the best driver to consider. The bottom line is that product types don't don't 1. Contraction of do not. 2. Nonstandard Contraction of does not. n. A statement of what should not be done: a list of the dos and don'ts. provide good or bad values--companies do. Good companies with low costs, good investment strategies, ethical customer treatment and the proper market forces will provide better returns over the long haul Long distance. Long haul implies traversing a state or a country. Contrast with short haul. , regardless of the type of product they offer. Chuck Ritzke consulting actuary actuary One who calculates insurance risks and premiums. Actuaries compute the probability of the occurrence of such events as birth, marriage, illness, accidents, and death. West Dundee, Ill. |
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