They are called DEATH PUTS!! But do not be put off by this term! See this excerpt from Saturday’s Wall Street Journal:
“A growing number of financial advisers are pointing to a little-known strategy that can help solve this problem [of low returns on investments]: “death puts.” Formally known as estate-feature puts, they are available on a handful of high-grade corporate bonds as well as most CDs sold through brokerages.
Death puts guarantee that when the owner of the bond or CD dies, the heirs can redeem it at face value, meaning they get back all the money that originally was invested. The fees usually amount to about 0.125% a year, and come out of the interest payments.
Meantime, buyers collect yields significantly higher than they can get on shorter-term investments. A typical investment-grade 10-year corporate bond currently yields about 3.5%, roughly double the yield of a similar five-year bond. A 10-year CD yields about 2.85%, more than a percentage point better than a five-year CD.
Those yields are far better than can be gotten from longer-term government bonds. A 10-year Treasury note now yields only about 2%, while a German bund yields only about 1.75%.”
I am no financial guru. Like many in my generation, I have lived for today, and never trusted anyone over 30. (I still can’t accept that that group now includes me.) Saving for tomorrow was boring, old school, and the future would take care of itself.
So imagine my surprise when my little “never-grow-old” Boomer brain actually got interested in finding out more about something called a “DEATH PUT!” You see, this is perfect for Boomers: we live off the higher yields NOW, and our heirs get to cash in the face value. It should be renamed. Write me and tell me your suggestions!
This fits perfectly in my “live for today” mindset!!! I can’t wait to find out what the real story is here….like the risks and all that other boring stuff. Fellow Boomer: there’s also a risk to doing nothing.
I suggest you join me in checking it out.
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