Pre Need/Final Expense 101

[Newby]

Newby, thanks for helping us to understand the pre need vs single premium issue. I was just thinking the past few days, that single premium is a good idea, but now you mention Medicaid.

Question about Medicaid: What actually happens there, please, with the single premium if the death benefit is more than the funeral cost?

So many folks where I live do end up in a nursing home, under Medicaid.

Thank you for your time.

Any excess premium of any policy that is assigned to a funeral trust has to have "the estate" listed as the only beneficiary after the funeral home is paid in order to be exempt for Medicaid.

Medicaid is first in line to collect all assets that run through the estate.

That doesn't mean all single premium policies are a bad thing. Most people don't plan to end up on Medicaid.

 

[SunnyDaze]

Hmmmm. I appreciate the answer, Newby.

 

[arnguy]

SunnyDaze, you can sell preneed in PA only if you have a Funeral Directors License IN ADDITION to your insurance license. It wasn't always that way----I sold preneed in PA some years ago until the law was changed.

 

[Todd King]

Hey Newbie,
Quick question on the preneed. If you have a higher end clientel, why not sell them a single premiun policy from Settlers? If you have a customer that has a CD they were saving to help with funeral expenses, why not use part of the CD for the single premiun and still have money left over for investments/emergency's.
In this case above, a 58 year old male would be a $11,875.50 single premium and would buy $25,000 in coverge (Settlers). I don't sell preneed but I think this is a pretty good approach.
Thanks

Just FYI....American Amicable would only cost him $11,150.00 to get $25,000 in coverage. I'm willing to bet that the commission is higher than Settler's too.

 

[Newby]

Just FYI....American Amicable would only cost him $11,150.00 to get $25,000 in coverage. I'm willing to bet that the commission is higher than Settler's too.

Settlers Commission at that age is 12.5%. They are usually a little lower on commissions but very good on the amount of coverage per dollar especially on the older ages.

 

[Todd King]

Settlers Commission at that age is 12.5%. They are usually a little lower on commissions but very good on the amount of coverage per dollar especially on the older ages.

That's actually not as bad of a commission % as I thought it would be, but still not quite as good as AM AM.

 

[SunnyDaze]

SunnyDaze, you can sell preneed in PAonly if you have a Funeral Directors License IN ADDITION to your insurance license. It wasn't always that way----I sold preneed in PA some years ago until the law was changed.

Thanks, arnguy. PA seems to have some unique requirements. Wonder why? I want to sell FE on the phone, and I see some carriers don't allow voice signatures in PA, or require a written disclosure up front, which kind of blasts phone sales out there.

I will look into SPWL and see how that works, too. I like the idea of preneed, as I have run into the 4 lately who do have up to $10,000 and wanted to pay for a funeral somehow.

 

[Newby]

Thanks, arnguy. PA seems to have some unique requirements. Wonder why? I want to sell FE on the phone, and I see some carriers don't allow voice signatures in PA, or require a written disclosure up front, which kind of blasts phone sales out there.

I will look into SPWL and see how that works, too. I like the idea of preneed, as I have run into the 4 lately who do have up to $10,000 and wanted to pay for a funeral somehow.

It may be similar to Kentucky. In KY they have a law that the agent MUST physically be in the room with the client when they sign the application. Many companies ignore the law but it leaves exposure that the client could complain 4 or 5 years into the policy and demand all their money back.

Kentucky also has a law that there can be no contestability (even for sucide) if the new policy is replacing an older policy that has been in force for 2-years. That makes many companies not allow ANY replacement in Kentucky.

Kentucky also requires a funeral director's license to sell pre-need insurance.

I'm sure these laws are all intended to protect consumers but they actually penalize them in a lot of cases.

 

[arnguy]

Thanks, arnguy. PA seems to have some unique requirements. Wonder why? I want to sell FE on the phone, and I see some carriers don't allow voice signatures in PA, or require a written disclosure up front, which kind of blasts phone sales out there.

I will look into SPWL and see how that works, too. I like the idea of preneed, as I have run into the 4 lately who do have up to $10,000 and wanted to pay for a funeral somehow.

The Funeral Director's lobby pressured the legislature in PA to make that requirement after one outfit really was screwing the consumers with bad sales practices-----I can't remember the name of that organization.

 

[elder]

Does anyone know if Indiana requires a funeral directors license? What steps are involved, like schooling, ce, E&O, how often due you have to renew? Thanks for your answers in advance.