Pre Need/Final Expense 101

[cptlbc724]

When is it clear that one is a better fit for the client than the other? I read in here before where someone simply stated that pre need is usually bought by people with higher incomes, people with less income generally buy final expense...

I had a 59 yr old client a couple of weeks ago tell me over the phone that he was declined with American Family, Western Southern and Globe's Whole life product. It was over type 2 diabetes , 48 units ..He said he was also talking to the local funeral home about pre need. I set the apmt thinking that I could at least get him modified with AmCon..We sit down at his table and I start to bring up possible options and he balks at the idea of a 2 yr wait. Said he'd prefer to go the pre need route if there was a wait. I ended up getting him 1st day coverage with Monumental but that's when the pre need mystery started for me. I know way too little about it. I don't know if there are health qualifications for a pre need, age cut offs,how long you have to pay on it , how much payments are compared to a final expense plan...All stuff that I am hoping to learn here..

If you have a client with health issues looking at final expense coverage who within 5-7 yrs and a higher premium would be paying more into a final expense policy than the face amount, is that a fitting candidate for pre need? If they luck out and live another 7 years , they could potentially pay in almost double their face amount.

Would it be wise to establish a referral connection with a local funeral home's designated pre need person for future similar cases?

 

[theinsuranceman]

Talk to Newby..he's the pre-need expert....he'll be by shortly.

 

[cptlbc724]

Ha! I hope so...Wish I could buy the vets on here lunch and listen to them for an hour, but the forum will do!

 

[Newby]

Preneed is usually a different mindset than FE. And usually that mindset is from more wealthy people.
Preneed is for people who want their funeral bought and paid for. They usually pay in one single payment or set it up on a limited payment and pay it off within a same as cash payoff option.
Final expense usually appeals to people who are used to buying everything on payments. They usually never pay anything completely off.
The death benefit on a Preneed policy is not usually a focus at all. But if they are not terminal and haven't had cancer, aids, a stroke, etc in 3 years they are full coverage day one.
Everyone qualifies for 70% after 12 months even if you have Aids, cancer and are under hospice care.
There is a place for both and YES it is wise for FE agents to buddy up with a Preneed agent because there are referals to be had. I am an exception that I sell both. Most Preneed agents would never sell FE.

 

[arnguy]

In PA you must hold a Funeral Director's license in addition to your insurance license in order to sell pre-need.

 

[cptlbc724]

Appreciate your point of view...Definitely sheds some light. I am meeting with a pre need guy next week and will do just that.

Newby from your pre need experience, the guy that I mentioned above is 58 and is now paying 51 mth for 10k with Monumental's Standard plan (Ohio). If he had said that he wanted to "think about it" and looked further into a pre need plan, would he have come close to that kind of payment arrangement?

 

[GreenSky]

I really don't sell either so here's my take.

The way to say goodbye to your family is to arrange and pay for your own funeral. Don't leave this task to those you leave behind.

Having to go through arranging 3 funerals because the people were too f*cking selfish to do it themselves, providing pre-need is a VERY honorable profession.

FE is not for burial. It's an expensive way to leave a couple of bucks behind.

Rick

 

[Newby]

Appreciate your point of view...Definitely sheds some light. I am meeting with a pre need guy next week and will do just that.

Newby from your pre need experience, the guy that I mentioned above is 58 and is now paying 51 mth for 10k with Monumental's Standard plan (Ohio). If he had said that he wanted to "think about it" and looked further into a pre need plan, would he have come close to that kind of payment arrangement?

Monthly payment doesn't usually enter into the decision. If the guy is age 58 and is only buying $10,000 to cover a funeral that will likely be 30 years from now he will be WAY underinsured.

Prices double approx every 15 years. Let's say his funeral would be $8,000 today. If he died at age 73 he should expect $16,000. If he dies at age 88 he should expect $32,000.

So the plan you are selling him would cover $10,000 of it and his kids would have to pay $22,000 more.

If he looks at a Preneed plan at a funeral home he can pay $8,000 now and it is guaranteed for life. If he can't pay it all at once he can pay it over two or three years.

This is why people who have money and understand inflation like Preneed. People who are less financially savvy like anything with the lowest monthly payment even if they have to pay forever. They don't understand that $10,000 30 years from now will have the buying power of around $2,500 today.
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In PA you must hold a Funeral Director's license in addition to your insurance license in order to sell pre-need.

A lot of states are going to that. It's a stupid law but since I have my funeral director's license it doesn't hurt me.

 

[xrac]

Monthly payment doesn't usually enter into the decision. If the guy is age 58 and is only buying $10,000 to cover a funeral that will likely be 30 years from now he will be WAY underinsured.

Prices double approx every 15 years. Let's say his funeral would be $8,000 today. If he died at age 73 he should expect $16,000. If he dies at age 88 he should expect $32,000.

So the plan you are selling him would cover $10,000 of it and his kids would have to pay $22,000 more.

If he looks at a Preneed plan at a funeral home he can pay $8,000 now and it is guaranteed for life. If he can't pay it all at once he can pay it over two or three years.

This is why people who have money and understand inflation like Preneed. People who are less financially savvy like anything with the lowest monthly payment even if they have to pay forever. They don't understand that $10,000 30 years from now will have the buying power of around $2,500 today.
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A lot of states are going to that. It's a stupid law but since I have my funeral director's license it doesn't hurt me.

Newby, you just told me something that I didn't know. How is it that you came to have a funeral directors license?

 

[retread]

The way to say goodbye to your family is to arrange and pay for your own funeral. Don't leave this task to those you leave behind.

I will second this vote. I just buried my sister last week, and she had provided a pre-need (pre-paid) funeral. I made a few changes to accomodate family wishes and paid handsomely for that small change.

Furthermore, I called the Funeral Director enroute to Florida and had him place an obit in the paper... he already had all the info. People in her community saw the notice and were able to come to the funeral... which was very nice.

She had failing health for most of the past year, and we talked about her final wishes over the course of many phone conversations, and she wrote them down and left me a copy, including the names and phone numbers of those she wanted contacted. I can't say enough about this.... I did not have to guess as to what her wishes were for flowers, hymns sung, place of interrment, etc. .... not to mention who got what of her meager belongings left behind.

I think if you sell either pre-need or FE that you should not forget to encourage your client to write down those simple wishes. Most policies include a notebook and guide for this purpose. It makes it a LOT easier for those left behind.