Byron answers Shawn's question

AccuQuote's (http://www.accuquote.com) CEO, Byron Udell answers Shawn's Question.

"Shawn asks:

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 tomorrows dividends? Where lies the risk of that future dividend?"

Category:

Education

Tags:

• AIG
• whole life insurance
• term life insurance
• annuity products
• life insurance policy
• life insurance
• annuity
• annuties

[yourlifesolution]

AIG is not a Life Insurance company, American General is and their assets are seperate. American General is financially sound, and AIG's woes are not intrisically an issue to their subsidiaries.