In the world of fixed income securities, it's pretty much a rule that if you want the highest rates, you invest in the longest term securities. The problem is that many retirees do not feel comfortable locking in their money for lengthy periods of time.
That's why "puttable" securities are on the rise. These securities are long term investments with higher rates, but can be redeemed at death or have a redemption preference.
Here are two examples as of 7/8/99 :
Provident Bank, FDIC insured, offered a 20-year CD. The first year interest is 9%. The rate drops to 7% in the second year and is locked in a 7%. Each year, the bank has the option to return your principal with interest. You also have the option to sell the CD on the secondary market (at more or less than face value). Should you die, your heirs can cash in the CD for its full face value. If you've been looking at CD rates, you probably have not come across many with this attractiveness.
Federal Home Loan Mortgage Corporation (Freddie Mac 7/23/14 ) 15 year Estate Note, 7%, price 100, implied rating AAA, callable 7/23/01 . Upon death, heirs have priority to cash in these notes as principal payments come back on mortgage repayments.
These investment choices provide high safety and a fixed income you can depend on. (Note that these securities can be called in which case your face value is returned and interest payments cease. If you reinvest, similar alternatives may offer higher or lower interest).
Since the availability of CDs and federally backed mortgage notes change daily, please set a time to come in when you have interest in these safe, highly-rated alternatives or check off on the enclosed coupon for information.