TITLE

Variable Versus Whole Life in Defined-Contribution Designs

PUB. DATE
November 2003
SOURCE
Journal of Financial Planning;Nov2003, Vol. 16 Issue 11, p34
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
The article compares variable versus whole life in defined-contribution designs. There are simulations illustrating the difference between volatile variable life equity returns and far more tranquil whole life returns over a lifetime. Arithmetic average is the average when totaling the year-to-year results and divide it by the number of years. The timing of gains and losses can have a tremendous effect on the actual performance, which is by far the most important cause. Although less likely, the actual result can be better that the arithmetic average, but no one should be disappointed with the outcome. Variable life illustrations create the illustrations that must show a constant yield. The volatility of equity returns can produce results that may appear to be unexpected but are actually natural, due to the unpredictability of equity gains and losses. It is important for older clients whose time horizons may make variable life far more risky because they may not have the time to earn back their investment mistakes. Nearly every article about life insurance in the mainstream press has the obligatory reminder for readers to check the financial strength ratings of companies before buying life insurance from them.
ACCESSION #
11272567

 

Related Articles

  • Box 3 Low interest rates and low returns in securities markets are a problem for life insurers and pension funds.  // Financial Stability;Nov2011, Vol. 11 Issue 2, p30 

    The article discusses the implication of low interest rates and low returns in securities markets on life insurers and pension funds in Norway. It notes the decline in the buffer capital of life insurers in the 3rd quarter of 2010 by 14 billion Norwegian krone (NOK). It also cites the difference...

  • Boost in U.S. firms' business expected. Hua, Thao // Pensions & Investments;6/11/2007, Vol. 35 Issue 12, p3 

    The article informs that a trend among Danish pension funds to move away from a minimum return guarantee on investments indicates potential new business for the U.S. and other foreign money managers. The Danish pension fund market is a mandatory defined contribution system, with both employee...

  • Providers wade into row over Aegon GPP cashback offer.  // Corporate Adviser (Online Edition);3/1/2013, p78 

    The article focuses on the payment offer launched by the multinational life insurance, pensions and asset management company Aegon NV to employers. It states that the company will pay employers half their first three months contributions made to their auto-enrolment scheme on its new Aegon...

  • Aegon to pay half employer's contributions in platform offer.  // Corporate Adviser (Online Edition);3/1/2013, p84 

    The article reports that the multinational life insurance, pensions and asset management company Aegon UK PLC will pay its employers half of their first three months' contribution made by them towards the workplace savings functionality of the company's Aegon Retirement Choices (ARC) platform. ,...

  • Life Insurance Company Not ERISA Fiduciary With Regard to Plan Participant Fees.  // Benefits Magazine;Jan2015, Vol. 52 Issue 1, p53 

    The article discusses a court case about the non-coverage as an Employee Retirement Income Security Act (ERISA) fiduciary of life insurance companies that provides investment options to a defined contribution (DC) plan in the U.S. The negotiation and disclosure of service provider fees to...

  • Life offices press for an end to LPI rule.  // Money Marketing;9/25/2003, p5 

    Reports on the lobbying efforts of life insurance offices for the relaxation of the limited price index (LPI) rule for defined-contribution pensioners in Great Britain. Value of LPI annuities; Arguments against LPI rule.

  • SAFER GROWTH. Jones, Ceri // Employee Benefits;Apr2010, Special section p35 

    The article discusses the impact of the stock market volatility on defined contribution (DC) pensions in Great Britain. It mentions that it stimulates the development of more actively managed multi-asset investment strategies that do not spend only on equity prices. It states that it accounts...

  • Guaranteed Income Options for DC Plans. Moore, Rebecca // Plan Advisor News;2013, p2 

    The article reports on the results of Insured Retirement Institute's (IRI) study which showed that guaranteed lifetime income options offered within defined contribution (DC) plans can address retirement security challenges such as longevity risk, volatility and sequence of returns risk.

  • Reducing Volatility in DC Plan Lineups. Manganaro, John // Plan Sponsor News;2014, p158 

    The article focuses on the views of Bradford Campbell, counsel with Drinker Biddle & Reath LLP, how U.S. pension plan sponsors could reduce volatility in defined contribution (DC) plans. Campbell suggests offering a diverse range of downside-protection products that address the need for...

Share

Read the Article

Courtesy of VIRGINIA BEACH PUBLIC LIBRARY AND SYSTEM

Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics