Difference Between Pre-need Insurance and F.E. Insurance

luvfe

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This question has a few parts to it.

The first - I am just trying to educate myself. What is the difference between a pre-need insurance policy and a FE policy? (I am NOT talking about pre-payment, making payments to a funeral home - I AM talking about when a funeral home sells the person an insurance policy to cover what they picked out).

I am talking about when someone purchases through a funeral home an insurance policy to cover what they are buying? How does that work? Is the funeral home typically selling them a "normal" whole life final expense policy, or is it some type of policy that is a hybrid of term and whole, or is it something else altogether? I guess the summary of this question is "What is a pre-need insurance policy"?


Second question - Is there any advantage as a FE agent to approaching funeral homes that are smaller, and do not have a full time agent they are hooked up with, and ask if we can sell our products to their clients? And if so, how does that work? Am I paid by the funeral home? Am I paid by the insurance carrier? Am I paid by both? This whole thing is kind of a mystery to me. Maybe it is a terrible source for leads, but maybe it is a good one. Just trying to figure this out. I searched this forum and can not really find a post on point on this. Anyway, any answers would help clear up this mystery for me. Thanks!!
 
This question has a few parts to it.

The first - I am just trying to educate myself. What is the difference between a pre-need insurance policy and a FE policy? (I am NOT talking about pre-payment, making payments to a funeral home - I AM talking about when a funeral home sells the person an insurance policy to cover what they picked out).

I am talking about when someone purchases through a funeral home an insurance policy to cover what they are buying? How does that work? Is the funeral home typically selling them a "normal" whole life final expense policy, or is it some type of policy that is a hybrid of term and whole, or is it something else altogether? I guess the summary of this question is "What is a pre-need insurance policy"?


Second question - Is there any advantage as a FE agent to approaching funeral homes that are smaller, and do not have a full time agent they are hooked up with, and ask if we can sell our products to their clients? And if so, how does that work? Am I paid by the funeral home? Am I paid by the insurance carrier? Am I paid by both? This whole thing is kind of a mystery to me. Maybe it is a terrible source for leads, but maybe it is a good one. Just trying to figure this out. I searched this forum and can not really find a post on point on this. Anyway, any answers would help clear up this mystery for me. Thanks!!


Newby will be the guy to answer your questions about pre need.
 
This question has a few parts to it.

The first - I am just trying to educate myself. What is the difference between a pre-need insurance policy and a FE policy? (I am NOT talking about pre-payment, making payments to a funeral home - I AM talking about when a funeral home sells the person an insurance policy to cover what they picked out).

I am talking about when someone purchases through a funeral home an insurance policy to cover what they are buying? How does that work? Is the funeral home typically selling them a "normal" whole life final expense policy, or is it some type of policy that is a hybrid of term and whole, or is it something else altogether? I guess the summary of this question is "What is a pre-need insurance policy"?


Second question - Is there any advantage as a FE agent to approaching funeral homes that are smaller, and do not have a full time agent they are hooked up with, and ask if we can sell our products to their clients? And if so, how does that work? Am I paid by the funeral home? Am I paid by the insurance carrier? Am I paid by both? This whole thing is kind of a mystery to me. Maybe it is a terrible source for leads, but maybe it is a good one. Just trying to figure this out. I searched this forum and can not really find a post on point on this. Anyway, any answers would help clear up this mystery for me. Thanks!!

Preneed is mostly GI and is ROP +8% for the first 6 months, 30% for months 6-12. And then goes up each month 13-24 until it's at 100%. Most have a inflation guarantee at the funeral home where it was bought. A 4% inflation if used elsewhere. Some are immediate with medical questions.

They are financed for 10 years max and most are dollar for dollar if paid for withing 3 years.

Always immediate coverage if paid for in full. In some states, like Ky, you have to be a licensed funeral director to sell preneed.

It's a different product than FE. Very much more expensive if making payments.

This is just preneed 101. If you want more details then someone like Newby could explain the finer details.
 
What is the benefit of a pre-need plan over a limited-pay/single-pay whole life product, even simplified?

Besides emotional reasons of having the funeral planned, I don't understand the advantage of a pre-need plan over something life agents can do.
 
What is the benefit of a pre-need plan over a limited-pay/single-pay whole life product, even simplified?

Besides emotional reasons of having the funeral planned, I don't understand the advantage of a pre-need plan over something life agents can do.

Just the inflation protection at that funeral home. If I go into the funeral home now and pick out my funeral the way I want it and then pay for it, it's paid for forever.

If it's $10,000 and I write them a check for $10,000 today then it's always paid for. If I die 25 years from now and that funeral costs $25,000 then it's taken care of.

Some people like that. I rarely run into those people. When I do I talk to them about single premium whole life. If they still want the funeral prepaid, I send them to Newby.

But, as I said, it's rare to run into those people. For me anyway. I'm running FE leads. The people that want to prepay are not sending in those cards. They go into their local funeral home and inquire.
 
Ok I have a decent answer on question 1 - what the product is. Question 2 remains unanswered. Is a funeral home a viable source for leads, and if so how do I get paid. Do I get paid (lets assume I have a funeral director license and can sell the product) by the funeral home, by the fe carrier, or both? Or do I give the funeral home a cut f my commission for generating the lead? Is this even a niche worth pursuing or am I nuts??????????
 
JD gave you the right answer. What you have to understand is that no one ever actually prepays the funeral home. They do a contract with the funeral home and the contract needs a funding vehicle in order to carry it out.

The funding must be held by a 3rd party trustee, not the funeral home. Banks and insurance companies serve as those. Insurance companies have advantages over banks with better death benefit growth, tax free growth and the ability to do payment options in addition to single pay.

Generally more affluent people preplan. Less affluent by FE.

When you sell Preneed insurance you are paid the same as you are when you sell FE. Commissions.

If you do searches on my old posts searching the word Preneed you will find a lot of info on it.
 
Thank you and all the above does make sense. But....still my question # 2 remains....is this a good source for leads? nad how would we get paid??
 
So newby I always have seen you say somebodys who's terminally ill should get a preneed plan. So it pays 30% months 6-12 and then increases monthly to month 24. If mostly terminal people bought a pre need plan the insurance company would be belly up. I guess if every deathly ill sick person bought a gerber policy and the avg person lived 3 yrs they'd also be in trouble.How are preneed plans priced? Are they based on the insurance companys loss ratios?Is there big price differences between different pre need plans?
 
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