By E. Dennis Zahrbock, CFP
Our office staff at the Rice Lake office Open House in
October 2003. From left to right: Jill Johnson, Steve Bowman,
Lori Bowman, E. Dennis Zahrbock, Sue Zahrbock,
Lisa Margalli, and Sarah Kaelberer.
It’s been a
long time since we actually wrote an article about something new and
exciting in our industry. This IS such an article so taking the time
to read it will make you more informed than most of the public.
If you know someone
who is over 65 years old and has a $250,000 face amount life insurance
policy with an“A” rated
insurance company or greater, Senior Settlements may be something
are “third party offers” to acquire
existing Life Insurance contracts from individuals
that either no longer want their life insurance or find that
premiums no longer fit their budget. It is possible to create“arbitrage” where
a settlement company may offer significant more cash then “surrendering the policy” and
a new life insurance company may be willing to issue a
modern “guaranteed death benefit” policy at standard
As an example, say
you have a ten year old Universal Life policy that was purchased in
the days of high interest assumptions. The premiums you’ve been paying are
now inadequate to keep the policy going. Yet you want to
have insurance for the rest of your life. Your doctor now
tells you your health isn’t what it once was!
The procedure is
to obtain a medical exam and then submit the results to both the “senior settlement” marketplace
and the “new life insurance” marketplace. The goal
is to find a “senior settlement” company that thinks you
may not live long and a “new life insurer” that thinks you
will live long. The perfect arbitrage!
As a specific example
let’s say you have a policy
you’ve been paying $7,500 a year for and it has a face
amount of $500,000. Let’s also say you bought the policy
when you were 65 and are now 75. Your health is less
then what it once was but you feel you are taking care of
yourself and your doctor agrees. The cash value of the
policy, in our example is $60,000. If you keep paying the
$7,500 premium your policy will lapse (due to lower interest
rates) by the time you are 85!
We go to market
and discover that a “settlement
company” will pay you $100,000 for something your insurance
company says is only worth $60,000. At the same
time a new life insurer says you’re a “standard risk” and
will issue you a new policy with a premium of $7,500 if
you will deposit the $100,000 with them. The new policy
is guaranteed to last until you’re 120 years old, 35 years
longer then your current policy. Bottom line, is you continue
to pay $7,500 per year but your coverage now lasts
until age 120 instead of lapsing at age 85!
using the same fact pattern but just no need to keep your
life insurance: Would you rather receive $60,000 from your insurer
to cash in your policy or $100,000 from a settlement company? Seems
like a nobrainer answer to me!
If you know of anyone that is over 65 and has
$250,000 of life insurance or more, let them know that
they have more options than they may realize. You might
find that they will greatly appreciate what senior settlements
By E. Dennis Zahrbock, CFP
It’s Official……..the last of our three
daughters, Rachael, will wed on May 30th. Her husband to be
is Todd Friesen.
Currently they are both seeking Master’s Degrees:
Rachael at Colorado State University and Todd at the University
of Colorado, Denver.
to pay a special mention to our Skip-A-Day of Work XX. That’s right; on May 24th, 2004 we’ll
our 20th annual get together. Mark your calendars and
come “skip-a-day of work” with us. We have some
plans for our twentieth year event!!
Our Rice Lake Office opening has far exceeded
our initial projections. We have been busy, busy, busy! This
necessitated daughter Lori and husband Steve Bowman
(and two of our grandchildren) to relocate their family to
Rice Lake. They are all enjoying the joys of living in a
small and friendly community while Steve heads up the
Rice Lake office.
Sue is in the news once again! Last issue
cited her being named to the Lakeview Hospital Board. Last
she was appointed to the Barron County Board of Supervisors.
She is up for her first public election in April and is
running un-opposed. It looks to me like she has a good
chance of getting elected!
Sue and I have been on two Mission Jamaica
visits in the past few months. In December we ventured to the
to assist in distributing 580 wheel chairs. Back again in
February, we assisted with some work at two schools in
Kingston where we even got to see some of our wheel
chairs in use.
a Wisconsin/Minnesota winter with snow! It has been a few
years since we really had some SNOW….
one of our snowmobiles hasn’t even been started in two
years! With two of the grandchildren handy we’ve enjoyed
some sledding, snowmobiling, and skiing. Also fun
for old Grandpa to just use his John Deere Tractor to clear
snow from the driveway!
BULLETIN BOARD OF
and Sue are able to get away for a couple weeks to their town
home in Palm Springs. Getting together with some of Dennis’ cousins
while there adds to the fun.
attends his National Study Group meeting in Santa Barbara.
A group of veterans of the financial services industry enjoy
sharing business concepts and life’s
and Sue travel to Washington D.C. for the annual AALU meeting.
Dennis will spend time in business meetings while Sue visits
her sister in Maryland.
and Sue are honored to attend Valmark Securities Founders Club
and Leader’s Conference. The
vacation starts in Salzburg and is followed by a Cruise of
the Danube. The conference ends a day before Skip-A-Day XX
so home they must rush.
24th marks Skip-A-Day XX! See the sign up enclosed in
this issue and be sure to reserve your spot as soon as
possible as this year promises to be one of the best
of course, May 30th is the day Todd Friesen and daughter
Rachael Zahrbock become husband and wife.
E. Dennis, Sarah and Steve will be attending the MDRT
annual meeting in Anaheim, CA. Both E. Dennis and
Sarah are again honored by being chosen to speak to
attendees. It is expected that 6,000 to 8,000 financial service
professionals will be in attendance.
Michele & Chris
Mattson are proud new parents of baby
girl, Erin Christine. And true to B & E service
guidelines, Michelle adhered to “Be on time” and “Do
what you say you will do” by having Erin on her due
date of February 25, 2004. She weighed 8 lbs. 6 oz.
and was 22 inches long. Parents and big sister
Lindsey are excited to welcome the new addition
into their home!
WROTE THE CHECK!
On October 1, 2003, Sarah acquired 23%
ownership of both Business and Estate
Advisers, Inc. and B&E Investment
Advisers, Inc. Phase I of the long-range
future of our companies is now complete.
you were in business of giving advice to business owners
WHERE WOULD YOU GO FOR ADVICE?
Introducing our 2004 Rice Lake Advisory Board Members
left to right: Rick Lund (Bethany Lutheran),
Don Cuskey Jr. (Lakeview Dental), Burnell Hanson
(Burnell's Decor), Amy Arnevik (Norske Nook), Dave
Hildebrand (WITC), Don Storm (Haack Orthodontics)
and Stefani Miller (Chibardun). Not pictured - Dianne
our next newsletter for a feature on our Wayzata Advisory