Whole Life Policies Vs Final Expense?

[MrInsurance12345]

I did a Google search and it said that you can get 100K in coverage for about $230 a month at age 70. Now of course assuming that the person was in good health and was able to pass the medical exam, why wouldn’t most people just buy the whole life policy instead of the final expense policy?


I also do realize that the whole life policy might take several months to pay out when the funeral money is needed. But if the person’s objective was to buy a policy for more than 10K (the cost of a funeral), wouldn’t it be better to get a whole life policy?

Or at least a 10K final expense policy and the rest with a whole life policy?


Am I missing something here? How do I hear about people taking $400 a month FE policies?

 

[shonceman]

I did a Google search and it said that you can get 100K in coverage for about $230 a month at age 70. Now of course assuming that the person was in good health and was able to pass the medical exam, why wouldn’t most people just buy the whole life policy instead of the final expense policy?


I also do realize that the whole life policy might take several months to pay out when the funeral money is needed. But if the person’s objective was to buy a policy for more than 10K (the cost of a funeral), wouldn’t it be better to get a whole life policy?

Or at least a 10K final expense policy and the rest with a whole life policy?


Am I missing something here? How do I hear about people taking $400 a month FE policies?

Final Expense policies are actually whole life policies. What makes them different is smaller face amounts and simplified underwriting. Yes, you can get better rates on whole life by using a fully underwritten product. But many FE prospects aren’t going to qualify for the best rates on a FU policy, and most aren’t going to spend $200+ per month for a larger policy. (Honestly not sure where you’ve heard about a $400/month FE policy. Mine are usually in the $50-70 range.) FE prospects can also be reluctant to submit to exams and blood work that FU may require.

 

[Newby]

I did a Google search and it said that you can get 100K in coverage for about $230 a month at age 70. Now of course assuming that the person was in good health and was able to pass the medical exam, why wouldn’t most people just buy the whole life policy instead of the final expense policy?


I also do realize that the whole life policy might take several months to pay out when the funeral money is needed. But if the person’s objective was to buy a policy for more than 10K (the cost of a funeral), wouldn’t it be better to get a whole life policy?

Or at least a 10K final expense policy and the rest with a whole life policy?


Am I missing something here? How do I hear about people taking $400 a month FE policies?

If someone is in great health and wants to spend $230 a month most FE agents would sell them a fully underwritten policy if it will get them substantially more than an FE policy. You just very rarely will run into that if you are running FE leads.

When agents are new to FE they tend to over think everything and think up all sorts of “what if” situations that they think they need to have all worked out before they go out and make money.

Just go out and run your leads and you will find that 90% will be people with a few health issues (table rated with fully underwritten) that want to pay $75 or less monthly. When you run into a case like you described you pull out the Trinity fully underwritten or KSKJ or Lafayette or whoever you have in your bag and you write it.

 

[shooter]

I did a Google search and it said that you can get 100K in coverage for about $230 a month at age 70. Now of course assuming that the person was in good health and was able to pass the medical exam, why wouldn’t most people just buy the whole life policy instead of the final expense policy?


I also do realize that the whole life policy might take several months to pay out when the funeral money is needed. But if the person’s objective was to buy a policy for more than 10K (the cost of a funeral), wouldn’t it be better to get a whole life policy?

Or at least a 10K final expense policy and the rest with a whole life policy?


Am I missing something here? How do I hear about people taking $400 a month FE policies?

I would have to challenge your numbers on WL.
I ran a quote on Compulife for a GUL just now.
GUL's are a lot less expense than Whole Life.
Whole Life has to give you a cash value equal
to the face at 100 or close to that age.

Gul is mostly death benefit, not much if any cash.
But the death benefit can last till 121.
Penn Mutual had the lost cost
Male
Preferred
70 Non-smoker

Premium - $283 per month.
Your google search is not accurate, sorry.

Like the above, knowledge persons shared.
Final Expense, most of time is a different animal.
Small face, lower income, lots of health issues and meds.

P.S.
You can't believe everything you read on the internet.

Shooter

 

[Allen Trent]

I did a Google search and it said that you can get 100K in coverage for about $230 a month at age 70.

guessing those are not accurate figures for true whole life for a 70 year old. Considering a very healthy 70 year old has a 15 year life expectancy, that insurance carrier cant turn $230 a month into a 100k lump sum in 15 years, especially after the costs to issue the policy & pay the agent. I think you would be looking at $400 or more per month for an average standard 70 year old.

By law, WL policies must also have the Cash value of the policy build up to equal the face amount of the policy by maturity (example: age 100, etc), basically laws require the policy to endow so cash grows to equal insurance. No lapse guaranteed UL can be cheaper because there is no requirement for there to be any cash value & therefore as long as the premium is paid, it wont cancel & therefore is basically forever term coverage.

 

[jdeasy]

guessing those are not accurate figures for true whole life for a 70 year old. Considering a very healthy 70 year old has a 15 year life expectancy, that insurance carrier cant turn $230 a month into a 100k lump sum in 15 years, especially after the costs to issue the policy & pay the agent. I think you would be looking at $400 or more per month for an average standard 70 year old.

By law, WL policies must also have the Cash value of the policy build up to equal the face amount of the policy by maturity (example: age 100, etc), basically laws require the policy to endow so cash grows to equal insurance. No lapse guaranteed UL can be cheaper because there is no requirement for there to be any cash value & therefore as long as the premium is paid, it wont cancel & therefore is basically forever term coverage.

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Best price for whole life I see is $383/mo. That won't turn into $100K either in 15 years. But it's supposed to. Most whole life written today don't endow until age 120 or 121.

 

[Allen Trent]

Best price for whole life I see is $383/mo. That won't turn into $100K either in 15 years

For sure, but carrier can turn $383 into $100k faster than at $230 per month. Carrier making 5% on their portfolio can get $383 per month to equal $100k by age 85 to break even on the death claim for average life expectancy. plus, factor in hopefully some will lapse out after covering up-front costs of commissions/underwriting, etc.

Most whole life written today don't endow until age 120 or 121.

For sure, just mentioned that as 1 example. Keep in mind, one of the reasons most dont endow/mature at age 100 any longer is so the carrier doesnt have to pay the customer the value & report the taxable gains to the client if it did mature at age 100 or even earlier from the older products that endow at age 85

 

[MrInsurance12345]

guessing those are not accurate figures for true whole life for a 70 year old. Considering a very healthy 70 year old has a 15 year life expectancy, that insurance carrier cant turn $230 a month into a 100k lump sum in 15 years, especially after the costs to issue the policy & pay the agent. I think you would be looking at $400 or more per month for an average standard 70 year old.

By law, WL policies must also have the Cash value of the policy build up to equal the face amount of the policy by maturity (example: age 100, etc), basically laws require the policy to endow so cash grows to equal insurance. No lapse guaranteed UL can be cheaper because there is no requirement for there to be any cash value & therefore as long as the premium is paid, it wont cancel & therefore is basically forever term coverage.

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Is this whole life or universal life? How much cheaper would it be for universal life? Or a GUL? Or what about term to 100 policies? Just trying to fend off the argument that customers may have against whole life vs final expense. And not all customers may come to you as traditional final expense customers- (referral customers) who may have a slightly different take than a traditional final expense customer. And who knows- maybe this kind of customer could be sold into something else? what other options would be good to recommend? Thanks!

 

[Tahoe Ray]

Or a GUL?

Shooter posted those numbers above.

whole life vs final expense

To reiterate, final expense is a type of WL. It just has tables already built-in, smaller face maximums, and is simplified issue.

 

[jdeasy]

Is this whole life or universal life? How much cheaper would it be for universal life? Or a GUL? Or what about term to 100 policies? Just trying to fend off the argument that customers may have against whole life vs final expense. And not all customers may come to you as traditional final expense customers- (referral customers) who may have a slightly different take than a traditional final expense customer. And who knows- maybe this kind of customer could be sold into something else? what other options would be good to recommend? Thanks!

FE is whole life. FE is nothing but a marketing term. Like MP is a marketing term.