Shawn’s Question
“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?”
March 19th, 2009 at 9:07 am
[...] questions submitted by readers. In the first few clips, Byron has answered questions such as how companies can guarantee high dividends in the current economy, and what happens to your policy if AIG goes bankrupt. The videos have an authentic, personal feel [...]