The Final Expense Market: Overview and Demographics

The Final Expense Market: Overview and Demographics
According to LIMRA, life insurance sales have been declining recently in most categories other than a few. One of those segments holding its’ own and increasing is the Final Expense market of Whole Life Insurance. But before you walk into the home of your first potential customer, there are a few things you need to know. FE sales are not rocket science but there are several things you should know about your customer and their tendencies to be able to close. Let’s go over some of the characteristics of the market segment and then we’ll touch on the actual appointment and sales process in later installments.
Market Segment Demographics:
Age Segment: The FE market is comprised of seniors aged 50 to 75 approximately.
Income Levels: They are in general lower income individuals. Typically you see a couple relying on just their social security checks for income. Some may also have a small retirement income from their previous employer but in general their income tends to be 25K or below of a couple and even lower for single, divorced, or widowed individuals.
Time and Place of Appointments: Senior FE sales allow for normal business hours. Most of the FE market is either retired or disabled. They are home during the day. That means you can run your appointments during the day and have your evenings and weekends with your family or to yourself. Most all of your appointments will be done at the residence of the prospect.
Desire for Safety: The FE market is also distinguished by the general desire of the senior to purchase insurance with guarantees. The Whole Life product seems to match their needs versus other insurance products. With most preferred issue whole life cases the following guarantees are in place. Rate – Their premiums remain level and will not increase. Lifetime Benefit – As long as premiums are paid and there are no loans or accelerations. Coverage cannot be cancelled due to age or health. Full death benefit is payable day one of coverage (preferred policies only).
The Need: Their need for final expense is defined by a couple factors in general. One, they do not want to be a burden to children or loved ones. They do not want them stuck with a funeral home bill they may not be able to pay on top of the grief they will be experiencing. That is not to say the children couldn’t afford to pay the final expenses of a parent but, more so the desire of the parent to not be a burden. This is important for a number of reasons, not the least being an opportunity for you to build emotion about the sale which we will cover later. The second factor of need is the fact that most of the FE market cannot simply write a check to cover FE obligations. When you run into this combination of factors, you are in position to help the customer address both concerns and make a real impact on their lives and your income.
Every appointment will be different. Some may have enough in cash to cover FE obligations but their concern for having insurance in place and not being a burden may override the fact that they have it covered. Some may simply not care of the burden they leave to others. On some occasions you will find both a need and desire for coverage but they simply cannot afford it. In other situations you will find both a need and the funds to cover the expense but they may have health conditions that make them uninsurable or only eligible for a GI (Guaranteed Issue) policy. It’s always a puzzle you have to put together to determine if you are able to help.
To Summarize: FE sales are made to the lower income senior market. Most of the market does not have adequate funds at disposal to cover funeral costs. They do not wish their death to cause a financial burden and seek policies that provide protection with guarantees. Whole life insurance policies seem to meet their needs best.
Look for additional installments of this very basic tutorial for agents new to the business or experienced agents wanting to expand into the FE market. I will cover topics of “How to Manage the FE Market”, The FE replacement Sale, The FE Appointment Process and hopefully others as time permits.
 
Great Stuff! How refreshing it is to actually read something that makes sense, helps others clear the air, and gives a guy a little motivation. Can't wait for the FE replacement sale and appointment process posts.
Thanks chaos
 
FE does appear to be the simplest form of insurance to sell. I could be wrong cause I am new, but it sure sounds easy compared to the rest.
 
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JD -- when you say the "FE market is [not] simple," what do you mean?

Maybe it is simple, but one has to learn and know the FE market. It is different than any other insurance market. They are world class procrastinators and most are broke to boot.

They did not get to this age and not have things taken care of because they have been good planners and/or good with money. Most will be LIS if not QMB plus.

Most do not have an insurance agent that they could discuss this stuff with.

You have been doing this long enough to have an understanding of what I'm saying. It's really hard to describe to someone that doesn't work the FE market everyday.
 
I know agents that have specialized for years in Final Expense sales and done quite well, even though none sell the volume you sell.

However, their market is totally different from what you describe. They do not work the welfare, QMB, hosing project markets. Most of their clients have social security, possibly a small company pension and savings. Since they tend to work established 50+ neighborhoods, many are still working. The majority own modest homes like this one.

MLS # 20110979 - Athens TN, 37303 | Homes.com

These FE agents work primarily in the rural areas, working through canvasing and referrals. Because of the fact they choose their clients, they are a little better quality which means better persistencey which results in the same income for fewer sales.

I actually wrote three of FE policies last week.. On was 25K on a 37 year old that is bi-polar. One was 5K on a 72 yr OD man and the other was 10K on a 49 year old woman who was taking 27 different medications. All owned thier home.. All took pride in thier ownership and the places were neat and clean.. I didn't have to worry about a place to sit. :D One, worked, one retired, one on disability. The thing they had in common with what you describe is " They are world class procrastinators". There may be only one FE market but it certainly has different segments and you don't have to work the very low end of it to make a living.
 
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I know agents that have specialized for years in Final Expense sales and done quite well, even though none sell the volume you sell.

However, their market is totally different from what you describe. They do not work the welfare, QMB, hosing project markets. Most of their clients have social security, possibly a small company pension and savings. Since they tend to work established 50+ neighborhoods, many are still working. The majority own modest homes like this one.

MLS # 20110979 - Athens TN, 37303 | Homes.com

These FE agents work primarily in the rural areas, working through canvasing and referrals. Because of the fact they choose their clients, they are a little better quality which means better persistencey which results in the same income for fewer sales.

I actually wrote three of FE policies last week.. On was 25K on a 37 year old that is bi-polar. One was 5K on a 72 yr OD man and the other was 10K on a 49 year old woman who was taking 27 different medications. All owned thier home.. All took pride in thier ownership and the places were neat and clean.. I didn't have to worry about a place to sit. :D One, worked, one retired, one on disability. The thing they had in common with what you describe is " They are world class procrastinators". There may be only one FE market but it certainly has different segments and you don't have to work the very low end of it to make a living.

That's true, but I am talking the FE market that we work from reply cards.

You certainly don't have to work the FE market with mailers, but I don't know of any top FE producers that are not.
 
That's true, but I am talking the FE market that we work from reply cards.

You certainly don't have to work the FE market with ma
ilers, but I don't know of any top FE producers that are not.

Forgot about "her" again didn't you? :1biggrin: (can't remember her name but think she is in Chicago)
 
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