People are interested in coverage that will support their families after they’re gone. Life insurance is their popular choice, and for good reason, as it supplements their income in order to help maintain their families’ lifestyles.
But, what’s often overlooked and underutilized is final expense insurance, or expense coverage for funeral arrangements.
While life insurance covers eventual budgetary needs, funeral costs require immediate action and expense following a death. The average funeral cost is approximately $10,800, and in the wake of a loss, the financial burden can rattle a family and add stress to grief.
Final expense insurance alleviates the burden of the expenses of funeral arrangements and burial costs, but close to 50 million seniors don’t have it! That’s 75 percent of people over the age of 75 that don’t have coverage for their funeral — and that’s where you come in.
Looking at the Details
Final expense insurance is simply a small whole-life policy with level rates for the life of the policy. The sales process for final expense is short and straightforward. Usually, the applications are brief and only have a series of yes-or-no medical questions. Most applications are “cascading,” which makes it easy to determine whether your client qualifies for preferred, standard, or modified rates.
Underwriting for final expense insurance is also simplified. Carriers perform MIB and prescription checks to confirm the answers given to medical questions on the applications. Some carriers also complete a telephone interview with clients to confirm their answers. There are no invasive medical exams.
Policies sold for final expense purposes tend not to lapse because clients understand that the cost of this insurance will only rise as they age and that the funds are vital to their family. Commissions for final expense are typically higher than term life policies and are usually equal to or greater than other permanent insurance products. Most carriers offer 100 percent or higher first-year commissions with lifetime renewals.
The Business Approach
Final expense insurance requires a different selling approach than life insurance. Funerals aren’t exactly a fun topic, and yet everyone eventually needs to prepare for one. Inevitability aside, it can be a difficult subject to bring up with potential clients.
If you are already selling Medicare Supplement insurance, you have a built-in client base. All you have to do is ask, “Do you have a plan in place to help your family cover your funeral and final expenses?” But, how do you continue from there?
There are several ways to present a final expense plan to potential clients. The first is presenting the plan as a final act of love. Removing the financial burden of the costs associated with a funeral and burial can be presented as a final gift from your clients to their families. Knowing these expenses are already taken care of would help relieve the grieving family members and allow them to focus on celebrating the lives of their loved ones.
Second, you can educate your clients on the cost of death. In order to sell final expense insurance, you must be able to illustrate the common, high costs associated with a funeral, such as a burial plot, casket, and transportation to the cemetery. When adding up the costs, you’ll be able to present a clear picture for your clients and help them realize how much money their loved ones would be responsible for upon their deaths.
Third, you can appeal to clients with smaller policies and lower premiums. Final expense policies cover much smaller amounts of money than traditional life insurance. A typical policy is between $5,000 and $25,000. Because the death benefits are low, the premiums are also more affordable. For many clients, final expense insurance may be the only insurance they have. You can assure them that their policies are guaranteed, and their premiums will remain the same for the life of their policies.
Fourth, remind them that timing is important. Make sure your clients are aware that the earlier they purchase their policies, the lower their premiums will be. A final expense policy is a small whole-life policy with level premiums. Carriers base premiums on your clients’ age and health condition at the time of purchase. The older the client, the higher the monthly premium. Plus, as your clients age, they may develop health conditions that could prevent them from purchasing policies in the future.
Ultimately, being able to show compassion to your clients is essential. Clients for this type of insurance may be elderly, on a fixed income, or have recently lost a spouse. By showing genuine empathy and understanding for their situations, you are developing their trust in you as their agent.
Final expense may seem like a difficult product to sell, but people are invested in making sure that their loved ones are taken care of, especially in their absence. Don’t feel intimidated to ask the tough question about death – many people may even be asking it themselves. By helping your clients plan ahead for an unsure time and an unsure event, you can instill a confidence that goes beyond the fine points of any policy.