1. Saturday, April 28, 2012 - 12:49 PM
Informative article, Ken, and thanks for finding it. It's interesting that these "death puts" have been around since the 90's. It's only now, when companies need more direct access to smaller retail investors, that they are being discussed more widely.
It looks like only a limited number of issue bonds with death puts, so it might be hard to diversify and also you would likely pay a premium to acquire the bond. I don't know if the premium would be covered by the "put".
As far as the CDs, the article warns that many are callable. If the institution calls the CD, the death put is worthless. Also, as you rightly point out, institutions generally waive fees to close a CD at the death of the owner. All in all, this is not a useful strategy for my situation, but it certainly could be appropriate for some.
It looks like only a limited number of issue bonds with death puts, so it might be hard to diversify and also you would likely pay a premium to acquire the bond. I don't know if the premium would be covered by the "put".
As far as the CDs, the article warns that many are callable. If the institution calls the CD, the death put is worthless. Also, as you rightly point out, institutions generally waive fees to close a CD at the death of the owner. All in all, this is not a useful strategy for my situation, but it certainly could be appropriate for some.
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