Death Put Bonds
10 RepliesJump to last post
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).
They’re good stuff. Make sure you know the terms of the put & spread them around w/ different issuers.
What about liquidity before death…particularly if interest rates move against you?
I did find them particularly suitable for my really, really old clients...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.
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.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.[/quote] True. My comment was based on all other things being equal.[quote=Broker24]I don’t think liquidity is any different than with traditional bonds.
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.
Many issuers require that the client live 6 months before the death put option is valid.
i think they worth a shot for older clients. it is a tough sell to sell a death put to a client
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?