“Hi Byron,
Thanks for taking time to answer questions. I am an Accuquote customer, with a term life policy with AIG. I have a question about whole life insurance/annuity products. How can some companies “guarantee” a dividend rate at pretty high percentage given these current financial challenges. With the financial markets and most real estate assets deteriorating as such, one company with a “whole life” product claims a “guaranteed” dividend rate of 6.5% as your policy matures. How could any insurance company (especially in these times) guarantee such a future return – wouldn’t it be fair to assume their asset base has a strong likelihood of deterioration like any other company suffering? AIG has encountered issues and needed government bailout, I would assume many insurance companies investments have taken a hit. I find it hard to believe any large investments haven’t deteriorated over the last 18-24 months? So, how can an insurance company offer such a product – are they simply using today’s premiums to pay tommorrows dividends? Where lies the risk of that future dividend?”
