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Business and Estate
A Publication of Business & Estate Advisers, Inc.

VOL. 19, NO. 1 WAYZATA, MINNESOTA Spring 2004

Senior Settlements
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 to consider!

Senior Settlements 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 rates!

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!

Another option 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 can do.

E. Dennis Zahrbock, CFP


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.

We have to pay a special mention to our Skip-A-Day of Work XX. That’s right; on May 24th, 2004 we’ll celebrate our 20th annual get together. Mark your calendars and come “skip-a-day of work” with us. We have some special plans for our twentieth year event!!

Our Rice Lake Office opening has far exceeded our initial projections. We have been busy, busy, busy! This has 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 November 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 island 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.

And finally, 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!


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MARCH 2004
E. Dennis 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.

APRIL 2004
E. Dennis 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 true importance.

E. Dennis 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.

MAY 2004
E. Dennis 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.

May 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 yet!

And, of course, May 30th is the day Todd Friesen and daughter Rachael Zahrbock become husband and wife.

JUNE 2004
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.

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Erin Christine
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!


Sarah Kaelberer
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.


If you were in business of giving advice to business owners and professionals

Introducing our 2004 Rice Lake Advisory Board Members

Pictured 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 Koser.

Watch our next newsletter for a feature on our Wayzata Advisory Board.


Business and Estate
Business & Estate Adviser, published periodically, is composed on a personal computer utilizing Microsoft Word 2000 and Times New Roman typeface. Camera-ready copy is generated on a Hewlett-Packard LaserJet 4050 printer. Gray-shades and printing by Wallace Carlson Company, Minnetonka, Minnesota. For additional copies or information, please contact Jule Kingren at (952) 475-0440. Copyright © 1990-2004 Business & Estate Advisers, Inc. All rights reserved.


282 East Wayzata Boulevard
Wayzata, MN 55391
(952) 475-0440

738 Wilson Avenue
Rice Lake, WI 54868
(715) 434-0440

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ValMark Securities, Inc.

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