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In Reply to: Re: Re: Re: Re: Re: Re: Whole Life? What the hell?!!! posted by PFS Phoenix on June 29, 2001 at 11:20:41:
To begin, turnover rate refers to what percent of the fund is sold off each year. When I mentioned that there was a turnover rate of 109%, that means that they are selling off all of the assets they had as well as those they acquired that year. And you know the income tax consequences right? Any gains inside of one year are taxed as income. Well, if the fund is several million or billion dollars, you can bet that they're paying the highest rate on that dollar. Sure they had a 26%, but they sold it off.
I realize 1% refers to loading fees, or basic terms, management fees. It is what goes to the money managers, traders, administrators, marketers and so forth responsible for the fund. Certainly a 26% gain beats a 5% gain, how often is a 26% gain really a 26%, not often. And any investor or financial-smart person will tell you that what is mentioned in reports and other advertisements is not actual return, its marketing.
Those numbers do not exclude the multitude of fees, inflation and taxes that go along with that gain.
How do you owe on a policy? You are only obligated to pay so long as you want coverage or have obtained policy loan, and even if you surrender the policy, the loan O/S + interest is deducted from the CV. And you cannot borrow more than the CV. So, as I began saying, if you had a variable policy, you only have to pay as long as the invested assets do not cover the expenses. Moreover, a UL policy allows maximum flexibility in which you can pay premiums whenever you choose. There are no scheduled premiums.
until next time....