Death Put Bonds

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Nov 24, 2007 9:48 am

Been doing alot of biz lately with death put bonds.  I can't seem to really find any negatives to doing them, anyone care to poke some holes (I always look for the pro's and cons of anything i use).

Nov 24, 2007 10:51 am

They're good stuff. Make sure you know the terms of the put & spread them around w/ different issuers.

Nov 24, 2007 8:57 pm

What about liquidity before death...particularly if interest rates move against you?

 
I did find them particularly suitable for my really, really old clients...
Nov 25, 2007 8:08 pm

Make sure you are familiar with the terms. Most of them allow 6-12 months post-death to make whole. I don't think liquidity is any different than with traditional bonds.

Nov 25, 2007 11:36 pm
Broker24:

I don't think liquidity is any different than with traditional bonds.

Except for the fact that the death put lulls everyone into a false sense of security and clients tend to end up with longer bonds than they otherwise might buy.  Longer bonds in rising rate environments = big discounts = liquidity issues.
Nov 26, 2007 11:21 am
Indyone:
Broker24:

I don't think liquidity is any different than with traditional bonds.

Except for the fact that the death put lulls everyone into a false sense of security and clients tend to end up with longer bonds than they otherwise might buy.  Longer bonds in rising rate environments = big discounts = liquidity issues.
 
True.  My comment was based on all other things being equal.
Nov 28, 2007 8:36 am

I have found that they are difficult to process after death.  It's not set up like an annuity (just a death cert and a form).  It has to go directly back to the issuer with their own documents.  And "death" checks are only mailed out a few times a year.

Nov 29, 2007 6:57 pm

Many issuers require that the client live 6 months before the death put option is valid.

Nov 29, 2007 9:28 pm

i think they worth a shot for older clients. it is a tough sell to sell a death put to a client

Feb 22, 2013 5:32 pm

Do you also deal with funeral insurance related issues? I'd like to know more about the specifics of your job, care to share some resources?