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Author: EvanReed Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19257  
Subject: Low CD RAtes Date: 4/14/2008 3:27 PM
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I invest my Mothers(92 years old) money, to try to maximize her income.
She is in a nursing home and expenses keep rising.

She just had a CD mature (was at 5.8%) now rates are so low, it will cut her interest income in half. I have checked Bank-rate, gone to a CD broker (that we used before with success) Broker does not now have a bank that will take new money at high rates. He does have a John Hancock Life insurance policy which they bought as a life settlement.
It is a 45 month term at 9%. If the policy owner dies, the policy will pay off, if not a Bond company pays. The broker tells me that it is safe and sure.

I understand what a life settlement is, but have not heard of selling it off to investors in chunks. Is this all legit and one way of earning more on your money?

Hope someone with experience can help
Thanks much,
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Author: tilnow One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12845 of 19257
Subject: Re: Low CD RAtes Date: 4/14/2008 5:01 PM
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Not an answer to your life settlement question, but as an alternative to the low CD rates our local credit union is offering a free checking account that pays 5.1%. No minimum balance is required.

The conditions are that you must use the debit card (free) six times monthly and go online once a month to view your bank statement. All ATM fees for out of network banks are refunded to you. If you have more than 25,000 in the checking account, the interest rate is reduced to around 2% on the amount over 25,0000.

The bank is offering this as a way to introduce people to using debit cards. If you're handling your mother's financial affairs, perhaps this could offer an advantage. I have not tried it myself, but my CDs will mature in late summer and I'm thinking of it.

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Author: cliff666 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12847 of 19257
Subject: Re: Low CD RAtes Date: 4/14/2008 5:48 PM
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He does have a John Hancock Life insurance policy which they bought as a life settlement.
It is a 45 month term at 9%. If the policy owner dies, the policy will pay off, if not a Bond company pays. The broker tells me that it is safe and sure.

I understand what a life settlement is, but have not heard of selling it off to investors in chunks. Is this all legit and one way of earning more on your money?

Hope someone with experience can help
Thanks much,

Sounds different from but similar to a viatical settlement. If it's a viatical, don't do it. In any case due a lot of due dilligence on that bond company. If something sounds too good to be true, it probably is. There are plenty of people still picking up the pieces from viatical settlements ten or more years ago (Including me.)

cliff

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Author: lethean Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12848 of 19257
Subject: Re: Low CD RAtes Date: 4/14/2008 10:24 PM
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This article and followup discussion was recently posted on the Vanguard diehard forum. The product sounds similar to the one you describe.

http://www.diehards.org/forum/viewtopic.php?t=16416&mrr=1208167953

I'd ignore the product, and I'd dismiss the advisor who suggested it.

Rates are low. That's widely known. So you shouldn't need to provide an explanation to family members as to why your mothers income decreased.

However, if you try to reach for yield in this low interest rate environment and take on unknown risks, you may find yourself in a situation where you WILL need to provide an explanation to other interested parties - as to what exactly went wrong.

Good luck. And I hope the link above is helpful to you.

Lethean

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