Hypothetical Annual Rates of Return | Pacific West Capital Group

No one can predict exactly when the insured will pass away and the policy will mature. Because the exact date of passing is the single factor that determines the annual rate of return, the shorter the longevity of the insured, the higher the annual rate of return. In contrast, the longer the actual longevity, the lower the annual rate of return. The chart below illustrates the rate of return for two scenarios: 100% Total Return, 150% Total Return.

Policy with 100% Total Fixed Return*

Years to Maturity

Amount Invested

Amount Returned

Simple Annual Rate of Return

1
2
3
4
5
6
7
8
9
10

$100,000
-
-
-
-
-
-
-
-
-

$200,000
$200,000
$200,000
$200,000
$200,000
$200,000
$200,000
$200,000
$200,000
$200,000

100%
50%
33.33%
25%
20%
16.66%
14.28%
12.5%
11.11%
10%

Policy with 150% Total Fixed Return*

Years to Maturity

Amount Invested

Amount Returned

Simple Annual Rate of Return

1
2
3
4
5
6
7
8
9
10

$100,000
-
-
-
-
-
-
-
-
-

$250,000
$250,000
$250,000
$250,000
$250,000
$250,000
$250,000
$250,000
$250,000
$250,000

150%
75%
50%
37.5%
30%
25%
21.42%
18.75%
16.66%
15%

* Minimum $20,000 investment; illustration based on a $100,000 investment