VUL Insurance

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Aug 27, 2009 8:22 am

As part of my team we have assigned some duties and my part will entail becoming the insurance specialist.  I have to admit after almost 20 years in the business this is an area that I know little about.  We have done a little, but are seeing more and more opportunities with our higher net worth clientele and business owners.  We currently use an outside "wholesaler" for lack of a better word that we open the door, they close the deal and in the end we split the commissions.  These guys appear to be very solid and have an internal knowledge that I do not have. 

 
I guess my question is two parts.  First of all since I have been handling the financial planning aspect in the past how do I become the "expert" in insurance?  Normally I would think you work under a person who has done it for a long time, but no one in my firm has really specialized in this area either.  I have no interest in changing firms or working for an insurance company as we already have our business running.
 
Secondly, many have posted that VUL contracts are like the plague and I am not sure I understand that.  If you run hypotheticals with reasonable returns, say 6% I don't think they have much chance of blowing up (OK I get the past 9 years).  Could someone explain to me why these are bad vehicles or at least point me in the right direction.
 
Thanks you in advance!
Aug 27, 2009 8:56 am

I rarely use them because the hypotheticals most likely show the client contributing the same amount or increasing amounts for 20-30+ years.  The odds of a client not stopping contributions in order to increase savings for the next down payment on a house, paying kids college tuition, paying down recently acquired credit card debt, etc. at some point during that period is extremely slim.  Clients aren't stupid, if you tell them to decrease savings in their 401(k) instead they'll think you're an idiot.  So many things have to go right in order for a VUL to act as it is intended that the risk isn't worth it for me.  Now, capital transfers are another thing.  I've seen them work beautifully several times. 

Aug 27, 2009 12:55 pm

VULs are not the plague, they are not unsuitable, and they do not always blow up.  For the clients we work with, we are not a huge fan of them simply because people already have so much of their net worth in the market, why tie their cash value LI to the market as well?  If you have business owners with 80% of their net worth in their business, then a VUL may be a good way to get some exposure to the market and get the temporary death benefit needed.  I have seen old VULs work excellent as accumulation vehicles but rarely as something that will a provide permanent death benefit.  If you have clients that need the life insurance, don't have a lot of stock market exposure, and don't plan to die with the full face amount in place then a VUL could be a nice option for them.

Aug 27, 2009 8:55 pm

this out to be a good thread.  save yourself some time and headache cashflow and steer clear of vul's.  it is not worth the time and effort and there is maybe, just maybe a 5% chance the policy works the way you want and say it will and the client is satisfied in the end.  i would also have some qualms being the life specialist if you don't really have the credentials/experience.
they are bad vehicles for many reasons, and i suggest you do a search of the forum for previous discussions concerning this topic. 

Aug 27, 2009 9:48 pm
theironhorse:

this out to be a good thread.  save yourself some time and headache cashflow and steer clear of vul's.  it is not worth the time and effort and there is maybe, just maybe a 5% chance the policy works the way you want and say it will and the client is satisfied in the end.  i would also have some qualms being the life specialist if you don't really have the credentials/experience.
they are bad vehicles for many reasons, and i suggest you do a search of the forum for previous discussions concerning this topic. 



What are bad vehicles for many reasons? VUL or insurance in general? I'm not an investment expert and I am not an insurance expert either but I do know a little bit more about insurance.  Are VUL's for everybody? No, no product is for everybody.  Can they be another vehicle for the right person? Absolutely it can be. 

The tax advantages found inside of a life insurance policy are unmatched to any other type of product.  The problem is when people don't understand them or they are oversold without the proper explanation.  If someone wants a guaranteed death benefit without any risk, VUL's are obviously not the tool for it.  I have used it for the individual who can't contribute to a Roth anymore because of income and maxed out on qualified plans.  We pick an amount they want to throw into a VUL on a monthly basis (example $1000/month) and we buy the smallest death benefit possible without triggering the MEC rules so that only a small portion is coming out for the insurance portion.  I usually put it in low cost investment options (combination of index funds and actively managed to keep overall expense ratio down).  Cash value grows tax deferred, you can access all of your cost basis without tax consequence and beyong cost basis, you access a majority of the cash through a loan and don't pay tax on it either.   The caveat is that you can't let the policy lapse by taking too much cash value b/c it still has to run but it's still an awesome benefit. 

Here's an example that I did recently (I'm estimating for simplicity purposes).  This individual funded this policy for about 25 years and over the years, his premiums out of pocket are 100K.  At average rates of return, by the time he was 65, it was about 1 million with about 900K of gain (again, I'm just estimating b/c I can't remember all of the numbers).  At this point, he can take an easy 100K without any question b/c it's a return of basis, so he has 900K left and 800K gain left.  If he wants at this point, he can take a loan of let's say 750K and there is no tax consequence for that b/c it's a loan and it doesn't need to be paid back.  He spends it all the next day and then dies, his beneficiaries receive $150K income tax free.  So out of the 900K of gain, he spent 750K without any tax consequence and the rest went to his beneficiaries income tax free.  This is the way that VUL's are supposed to work and can be done if done properly.

Are there costs in the policy? Yes but I'll take a $5 dollar monthly policy charge and pay insurance costs so I can legally screw the IRS out of taxes. 

Aug 27, 2009 9:49 pm

I often call these laboratory products because they work much better in a laboratory than in the real world.  Human nature and VUL don't go together.

 
Let's ignore that and keep it simple.   First of all, you need to understand the basics of VUL.  VUL combines annually renewable term insurance with a side fund of investments.
 
There are two basic problems with this.
1)Annually renewable term insurance isn't designed for a permanent insurance need.
2)The investments are very expensive.
 
I am not a fan of buy term and invest the difference.  However, this is exactly what VUL is, but done in one policy.  Whenever I compare VUL to BTID, the term insurance with a side fund blows away the VUL.  This is because the insurance in VUL is overpriced and the investments are overpriced.
 
I've put the challenge out there for someone to put together a scenario where VUL would beat BTID, but nobody has done it.
 
If you'd like, we can through a prospectus for a VUL product and you'll quickly see why it's not an appropriate product.
Aug 27, 2009 9:52 pm
army13A:
theironhorse:

this out to be a good thread.  save yourself some time and headache cashflow and steer clear of vul's.  it is not worth the time and effort and there is maybe, just maybe a 5% chance the policy works the way you want and say it will and the client is satisfied in the end.  i would also have some qualms being the life specialist if you don't really have the credentials/experience.
they are bad vehicles for many reasons, and i suggest you do a search of the forum for previous discussions concerning this topic. 



What are bad vehicles for many reasons? VUL or insurance in general? I'm not an investment expert and I am not an insurance expert either but I do know a little bit more about insurance.  Are VUL's for everybody? No, no product is for everybody.  Can they be another vehicle for the right person? Absolutely it can be. 

The tax advantages found inside of a life insurance policy are unmatched to any other type of product.  The problem is when people don't understand them or they are oversold without the proper explanation.  If someone wants a guaranteed death benefit without any risk, VUL's are obviously not the tool for it.  I have used it for the individual who can't contribute to a Roth anymore because of income and maxed out on qualified plans.  We pick an amount they want to throw into a VUL on a monthly basis (example $1000/month) and we buy the smallest death benefit possible without triggering the MEC rules so that only a small portion is coming out for the insurance portion.  I usually put it in low cost investment options (combination of index funds and actively managed to keep overall expense ratio down).  Cash value grows tax deferred, you can access all of your cost basis without tax consequence and beyong cost basis, you access a majority of the cash through a loan and don't pay tax on it either.   The caveat is that you can't let the policy lapse by taking too much cash value b/c it still has to run but it's still an awesome benefit. 

Here's an example that I did recently (I'm estimating for simplicity purposes).  This individual funded this policy for about 25 years and over the years, his premiums out of pocket are 100K.  At average rates of return, by the time he was 65, it was about 1 million with about 900K of gain (again, I'm just estimating b/c I can't remember all of the numbers).  At this point, he can take an easy 100K without any question b/c it's a return of basis, so he has 900K left and 800K gain left.  If he wants at this point, he can take a loan of let's say 750K and there is no tax consequence for that b/c it's a loan and it doesn't need to be paid back.  He spends it all the next day and then dies, his beneficiaries receive $150K income tax free.  So out of the 900K of gain, he spent 750K without any tax consequence and the rest went to his beneficiaries income tax free.  This is the way that VUL's are supposed to work and can be done if done properly.

Are there costs in the policy? Yes but I'll take a $5 dollar monthly policy charge and pay insurance costs so I can legally screw the IRS out of taxes. 


Look at all the internal expenses and you'll see that it will lose to BTID and it has much more risk because if the policy lapses all gains are taxed as income.  In your example of dying the next day, he better, or else, he's in danger of the policy ultimately lapsing.
Aug 27, 2009 10:04 pm
anonymous:

I often call these laboratory products because they work much better in a laboratory than in the real world.  Human nature and VUL don't go together.

 
Let's ignore that and keep it simple.   First of all, you need to understand the basics of VUL.  VUL combines annually renewable term insurance with a side fund of investments.
 
There are two basic problems with this.
1)Annually renewable term insurance isn't designed for a permanent insurance need.
2)The investments are very expensive.
 
I am not a fan of buy term and invest the difference.  However, this is exactly what VUL is, but done in one policy.  Whenever I compare VUL to BTID, the term insurance with a side fund blows away the VUL.  This is because the insurance in VUL is overpriced and the investments are overpriced.
 
I've put the challenge out there for someone to put together a scenario where VUL would beat BTID, but nobody has done it.
 
If you'd like, we can through a prospectus for a VUL product and you'll quickly see why it's not an appropriate product.



Anon, I know you have a lot of knowledge b/c I've read your posts.  But here is where I'm coming from on this. 

With the investments being expensive, that is why I use a majority of index funds inside of a VUL.  I recently consturcted a pfolio with a total expense ratio of 0.34.  Ins companies try to push their asset allocation models but they're too expensive for my taste (1.4 or 1.5). 

When you use BTID, what kind of account are you putting the cash in? Taxable brokerage account without the tax benefits of a side account inside of a VUL.  For the taxable account to beat the VUL with all things being equal, the taxable account has to WAY OUTPERFORM the VUL just to be equal in order to make up for the lacking of tax benefits b/c you have capital gains you're paying along the way.  And let's just pray that the capital gains rate stays at 15% but with Dems in office, that doesn't seem likely. 


Aug 27, 2009 10:08 pm
anonymous:
army13A:
theironhorse:

this out to be a good thread.  save yourself some time and headache cashflow and steer clear of vul's.  it is not worth the time and effort and there is maybe, just maybe a 5% chance the policy works the way you want and say it will and the client is satisfied in the end.  i would also have some qualms being the life specialist if you don't really have the credentials/experience.
they are bad vehicles for many reasons, and i suggest you do a search of the forum for previous discussions concerning this topic. 



What are bad vehicles for many reasons? VUL or insurance in general? I'm not an investment expert and I am not an insurance expert either but I do know a little bit more about insurance.  Are VUL's for everybody? No, no product is for everybody.  Can they be another vehicle for the right person? Absolutely it can be. 

The tax advantages found inside of a life insurance policy are unmatched to any other type of product.  The problem is when people don't understand them or they are oversold without the proper explanation.  If someone wants a guaranteed death benefit without any risk, VUL's are obviously not the tool for it.  I have used it for the individual who can't contribute to a Roth anymore because of income and maxed out on qualified plans.  We pick an amount they want to throw into a VUL on a monthly basis (example $1000/month) and we buy the smallest death benefit possible without triggering the MEC rules so that only a small portion is coming out for the insurance portion.  I usually put it in low cost investment options (combination of index funds and actively managed to keep overall expense ratio down).  Cash value grows tax deferred, you can access all of your cost basis without tax consequence and beyong cost basis, you access a majority of the cash through a loan and don't pay tax on it either.   The caveat is that you can't let the policy lapse by taking too much cash value b/c it still has to run but it's still an awesome benefit. 

Here's an example that I did recently (I'm estimating for simplicity purposes).  This individual funded this policy for about 25 years and over the years, his premiums out of pocket are 100K.  At average rates of return, by the time he was 65, it was about 1 million with about 900K of gain (again, I'm just estimating b/c I can't remember all of the numbers).  At this point, he can take an easy 100K without any question b/c it's a return of basis, so he has 900K left and 800K gain left.  If he wants at this point, he can take a loan of let's say 750K and there is no tax consequence for that b/c it's a loan and it doesn't need to be paid back.  He spends it all the next day and then dies, his beneficiaries receive $150K income tax free.  So out of the 900K of gain, he spent 750K without any tax consequence and the rest went to his beneficiaries income tax free.  This is the way that VUL's are supposed to work and can be done if done properly.

Are there costs in the policy? Yes but I'll take a $5 dollar monthly policy charge and pay insurance costs so I can legally screw the IRS out of taxes. 


Look at all the internal expenses and you'll see that it will lose to BTID and it has much more risk because if the policy lapses all gains are taxed as income.  In your example of dying the next day, he better, or else, he's in danger of the policy ultimately lapsing.



You are right, it does have costs associated with these but I strongly believe the tax shelter you receive far outweigh the costs.  Obviously I made that loan example to prove a point b/c if you tried to take a loan out for that much, the ins company would probably throw up a flag and say the policy has a chance of lapsing.  So instead of taking a 750K loan, take out 500K loan and let the rest of the cash value still accumulate and when it accumulates more, take out another loan.  The goal is to keep enough to keep funding the policy w/o lapsing the policy but try to draw down the cv as much as possible.  Is it foolproof? Absolutely not but it has to be done right and IF done right, can be beautiful. 

Aug 27, 2009 10:09 pm

Anonymous, almost all VULs sold today carry some type of lapse-guard rider so saying they in the distribution phase they will lapse and the gains become taxable is not a fair statement to make.  If you surrender the policy at some point we know that may or may not trigger a tax event.

Of course what we do know will happen with most of these VULs is that the policyholder will not understand what they purchased and 10 years in when the policy is underwater and finally getting to the point where they have built enough cash value to outweigh the loads and policy fees being charged and will start to show a decent return, a new agent will come in and show them how they will 1035 the CV into a VA and then offset the first $X,XXX of gains they will earn in the new agent's VA by using the loss they are showing in the VUL, and of course sell them another life policy to replace the VUL they 1035 exchanged.

Aug 27, 2009 10:13 pm
BerkshireBull:

Anonymous, almost all VULs sold today carry some type of lapse-guard rider so saying they in the distribution phase they will lapse and the gains become taxable is not a fair statement to make.  If you surrender the policy at some point we know that may or may not trigger a tax event.

Of course what we do know will happen with most of these VULs is that the policyholder will not understand what they purchased and 10 years in when the policy is underwater and finally getting to the point where they have built enough cash value to outweigh the loads and policy fees being charged and will start to show a decent return, a new agent will come in and show them how they will 1035 the CV into a VA and then offset the first $X,XXX of gains they will earn in the new agent's VA by using the loss they are showing in the VUL, and of course sell them another life policy to replace the VUL they 1035 exchanged.



Berkshire, you are absolutely right.  Most of them have the rider that if they pay the min premium, the DB is guaranteed and the policy will not lapse, regardless of CV. 

Aug 27, 2009 10:41 pm

A major issue is no matter how big the cash value gets, there is no breakpoint.  Is there any company out there that has a VUL that doesn't have the 5% "premium expense charge"?

Aug 27, 2009 11:09 pm

why does it have to be so difficult really?  you want the trouble and headache of convincing a client that this vul is actually going to work, year after year.  if it IS an appropriate product for a specific client, i am assuming this will be a high(er) net worth client, yes?  and likely someone other advisors want to take from your book.  why make it easier?  as anon said, show a scenario where a vul betters a btid scenario.  and as previously stated, real clients are not willing to wait 30 years for the whole thing to "work."  they will get impatient and jump ship the minute the opportunity presents itself.
all i am saying is this, it is not wort the extra headache and potential-notice i said potential-problems down the road. 

Aug 27, 2009 11:29 pm

The challenge that proponents of VUL face is they all talk in terms of "if".  "If" the investments return 6-7% every single year, it looks awesome.  "If" the expenses don't get jacked up by the insurance company, it won't blow up.  "If" the client can afford to continue to fund the policy to the max, it will be a great retirement supplement.  Like anonymous has stated numerous times, these are labratory experiment ideas, not real world.  If any of these factors goes against us, a VUL turns into a ticking time bomb. 

 
As we all know, investments don't go up in a straight line.  Given the economic climate, insurance companies are scaling back on guarantees and could raise expenses on existing policyholders.  Moreover, clients are feeling the pinch and are scaling back on many household items.  Some of which involve investing, savings, and insurance costs.  And as far as I can tell, not one of us has the foresight to predict where our clients will be next year, much less 20 years from now. 
 
For me, I would rather take some uncertainty out of my clients' lives.  Sure, a lot take on risk in many aspects of their lives (investing, owning businesses, occupations), but they don't feel the need to take on risk in every part of their financial world.  Hence, I use WL.  Sure, they may end up with more money in the end, but if my clients retire in an environment like we're in today, they're gonna be thanking me for having a safety net in place. 
 
Finally, one aspect that has been severly overlooked with VUL is the idea of minimizing the death benefit.  My perspective is that the higher the death benefit, the more powerful permanent life insurance becomes.  Why?  One can leverage the death benefit to provide a client more income options at retirement.  When you minimize the DB, you're fractionally (at best) better off than one who buys term and invests the difference.  Things like pension maximization, CRTs, reverse mortgages, and asset spend-downs are not viable options when one has a small, or no DB at retirement.  I see it regularly, 65-70 year old client, small WL policy, big QP, house paid off, some securities and a rainy day fund, but nothing else.  We look into the aforementioned concepts, but to purchase a WL or GUL policy big enough to maximize these ideas are not feasible.  There's not enough cash flow available. 
 
When we're planning for a retirement for our clients, it's important to understand that it's not how much wealth we can create, it's how much income we can generate that makes a difference.  And when we have non-correlating income options at retirement, we give our clients the greatest chance of accomplishing the three goals everyone has:  1) Maximize income; 2) Never run out of money; 3) Pass along the biggest net estate possible.  Ultimately, I haven't been able to figure out how VUL will fit into this equation.  In order for it to work, it's proponents are suggesting a small face amount to maximize accumulation.  But it doesn't take into account that we then can only rely on assets for income.  And that, in my opinion, is less than optimal.
Aug 28, 2009 6:43 am
army13A:
anonymous:

I often call these laboratory products because they work much better in a laboratory than in the real world.  Human nature and VUL don't go together.

 
Let's ignore that and keep it simple.   First of all, you need to understand the basics of VUL.  VUL combines annually renewable term insurance with a side fund of investments.
 
There are two basic problems with this.
1)Annually renewable term insurance isn't designed for a permanent insurance need.
2)The investments are very expensive.
 
I am not a fan of buy term and invest the difference.  However, this is exactly what VUL is, but done in one policy.  Whenever I compare VUL to BTID, the term insurance with a side fund blows away the VUL.  This is because the insurance in VUL is overpriced and the investments are overpriced.
 
I've put the challenge out there for someone to put together a scenario where VUL would beat BTID, but nobody has done it.
 
If you'd like, we can through a prospectus for a VUL product and you'll quickly see why it's not an appropriate product.



Anon, I know you have a lot of knowledge b/c I've read your posts.  But here is where I'm coming from on this. 

With the investments being expensive, that is why I use a majority of index funds inside of a VUL.  I recently consturcted a pfolio with a total expense ratio of 0.34.  Ins companies try to push their asset allocation models but they're too expensive for my taste (1.4 or 1.5). 

When you use BTID, what kind of account are you putting the cash in? Taxable brokerage account without the tax benefits of a side account inside of a VUL.  For the taxable account to beat the VUL with all things being equal, the taxable account has to WAY OUTPERFORM the VUL just to be equal in order to make up for the lacking of tax benefits b/c you have capital gains you're paying along the way.  And let's just pray that the capital gains rate stays at 15% but with Dems in office, that doesn't seem likely. 



Instead of arguing, post a prospectus and then let's go from there.  There are a few things to keep in mind.  
 
1) All of the expenses must be examined.  These can include:
A) Front end sales charge with no break points.
B) Annually increasing cost of insurance
C) M&E Charge (same impact as having higher fund charges)
D) Miscellaneous charges
 
2)Index funds are very tax efficient.  In a brokerage account, for the most part, they will be growing tax deferred.  At death, they will receive a step-up in basis.  My point is that the tax drag will be minimal.
 
When you are looking at real numbers, you are going to see that the side fund doesn't have to outperform at all.  In fact, I'm talking about the term + side fund outperforming using identical funds.  The fees of the VUL are an incredible drag on performance.
 
Again, instead of arguing with me, post a prospectus, and you'll see that I'm correct.  Even if we can come up with an example where I'm wrong, I'll be wrong by such a little bit that I'll only be wrong in hindsite (person dies at the precise best time) and it doesn't make up for the fact that there is such a strong real world possibility of something going wrong.
Aug 28, 2009 9:13 am

Once again guys you are providing some excellent feedback so with that I say thank you. 

 
Our team has made a decision to expand and grow our business over the next 20 years so yes I have very little experience in life insurance, but I have the skills to learn this world.  Like investing you learn from those that know and the trick is in finding someone who can train you the right way where you have a client centered practice.  I don't expect to be the "expert" by next week, but I do anticipate getting pretty good at this over the next 5 years.  We have the book, fee based business and high net clientele to venture off into this world, but I want to make sure we do it right for them.  Here is a current example I have just started working on.
 
Client, male age 49 high net worth and in a senior position of a decent size small business.  Has a UL policy set up in 1989 with 200k cash value that the company has been funding at an annual premium of $9500 and a death benefit at $719,000.  Policy is paying 4% and has for a while.  When I got in front of him we re-negotiated the company contribution and they have agreed to now make contributions for him of $20,000.  His priority is cash value accumulation with a tax efficient income upon retirement (62-65 depending on health) and has little interest in a death benefit.  Ran an analysis for a VUL which at 6% would increase his death benefit to $1.2 million, but more importantly would allow him tax advantaged income of $75,000 for many years if we can maintain some type of return.  Again I feel 6% is conservative and understand this doesn't guarantee anything.  Too me this plan makes a great deal of sense, but as I said before I am just not sure.  I had two different general insurance agency partners quote this for me and both came back with this similar plan.  Any thoughts or additional questions?
 
Thanks again for your thoughts as I do value most of you and your insights.
Aug 28, 2009 12:56 pm

What equity-based investment has gone up by 6% every year, year in and year out?

 
Learn this now before you screw it up:  VUL (or any life insurance) illustration is AN ILLUSION.  Other than the guaranteed column, nothing is written in stone.  As an exercize, ask the insurance companies you're looking at to run an illustration that shows a negative return for the next several years.  Here's a hint:  they won't, nor have the capability of doing so.  If they did, they know they'd never be able to sell VUL.
 
Edit:  If you stop to think about it, VUL really doesn't make sense.  Consider this:  Why do insurance companies continually put out new versions of UL and VUL?  Yet, WL and term insurance are essentially the same since their inception?
Aug 28, 2009 1:41 pm
deekay:

What equity-based investment has gone up by 6% every year, year in and year out?

 
Learn this now before you screw it up:  VUL (or any life insurance) illustration is AN ILLUSION.  Other than the guaranteed column, nothing is written in stone.  As an exercize, ask the insurance companies you're looking at to run an illustration that shows a negative return for the next several years.  Here's a hint:  they won't, nor have the capability of doing so.  If they did, they know they'd never be able to sell VUL.
 
Edit:  If you stop to think about it, VUL really doesn't make sense.  Consider this:  Why do insurance companies continually put out new versions of UL and VUL?  Yet, WL and term insurance are essentially the same since their inception?
 
I don't usually post during the day and was going to respond to all of the other posts over the weekend but I had to clear this one up.  Deekay, you have a lot of knowledge but that is flat out wrong because I just showed THAT EXACT scenario the other day.  You can show negative returns.  And as for counting on 6-7% over the long period, that's a bet I'll always take.  Even after last years market thumping, large and small caps have beat that since the inception of the market.  If an individual can't get a client 6% return over the long haul (20 to 30 years and beyond), they shouldn't be in this business. 
Aug 28, 2009 1:52 pm

i think we all agree army, but that usually means 8-9% gross in a vul to achieve the 6% net.

Aug 28, 2009 2:09 pm
army13A:
 
I don't usually post during the day and was going to respond to all of the other posts over the weekend but I had to clear this one up.  Deekay, you have a lot of knowledge but that is flat out wrong because I just showed THAT EXACT scenario the other day.  You can show negative returns.  And as for counting on 6-7% over the long period, that's a bet I'll always take.  Even after last years market thumping, large and small caps have beat that since the inception of the market.  If an individual can't get a client 6% return over the long haul (20 to 30 years and beyond), they shouldn't be in this business. 
 
Interesting.  I stand corrected.  Can they show maximum insurance charges and investment charges while showing those down years?  In other words, can they really illustrate a worst-case senario?