dangers of interest accrual
In this video, we review a case study that was brought to us by a client. Another premium financing intermediary had sold him this policy, financed using an irresponsibly leveraged strategy using interest accrual.
It worked assuming the policy enjoyed a 5.67% index credit each year, but when run at a 5.41% index credit, it would lapse in policy year 14.
It is not much different than paying full retail price for a fake Rolex watch.
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