Lies and damn lies

I found this ad in Newsweek. This one was breathtaking even by normal dubious standards that advertisments have.

Here is my beef with it:

1. See what the small print says. THere was a payment of $14,352 plus $648 annual premium. Somehow, that is equated to an initial payment of $15,000. How does that work? And then the return is computed on 22,005 based on an initial payment of $15,000. I dont get it.

The way I see it, the net payments were: $14,532 + ($648*10) = $20,832.

The internal rate of return on that (using (final/initial)^1/#years)-1)*100 = .54%. Far cry from 3.91%!

2. It is very interesting that they have chosen the time period from 9/30/1999 to 9/30/09. What if you had chosen a different time period? How about Dec 1994 to Dec 2004? The S&P 500 went from 45.54 to 120.87. That gives an annualized return of 10.25%. How much did the insurance pay out in that period ?

This kind of bad advertising from a large company is sad to see