Some of the most successful final expense insurance agents come from entirely unrelated industries – so don’t be afraid to add final expense to your portfolio today!
Today, we will go over everything you will need to know to successfully sell final expense insurance. Whether you are new or experienced in final expense or insurance, you will take something away from this.
Let us get started.
What is final expense insurance?
Final expense insurance is life insurance that serves the purpose of covering funeral and other final expense costs. This ensures that your prospects’ loved ones are not burdened with any out-of-pocket funeral costs.
The term was coined to describe the low face value of life insurance sold to address funeral planning. Typically, the face amount ranges anywhere from $5,000 to as much as $50,000.
What are the different types of final expense plans?
In the field or over the phone, there are four types of policies you will be selling. These are all based on the prospect’s health and dictates how the benefit is paid out. To ensure you are offering your client the best option, it is critical to understand the difference between plans.
Level final expense plans
Plans that pay out the total benefit amount of life insurance starting immediately after approval are known as level plans. For example, sell a level policy for $20,000. The policy’s beneficiary will get the full policy amount, even if the insured dies within a week of the policy being active.
The other types of policies have various waiting periods and payment methods before the full policy amount is paid in the event of the insured’s death. Level plans are the most cost-effective plans and often pay the highest commissions.
Graded final expense plans
Graded plans are good options for clients who have certain pre-existing health conditions that you might uncover during your evaluation of the clients or through medical questions during the application process.
These plans pay out the death benefit on a graded scale during the first 24 months of the policy rather than all at once. For example, a $20,000 graded policy could pay out the following structure depending on the carrier.
Death in year 1 of owning the policy: 30% or $6,000
Death in year 2 of owning the policy: 70% or $14,000
Death in year three or later: 100% of the policy is paid out
Note: Accidental death in any year pays 100% of the death benefits
Different companies have different payout schedules, so it is essential to understand the plan when explaining to your clients fully.
Modified final expense plans
Known as modified burial insurance plans, these plans are nearly identical to the graded plans aside from the type of payout. These plans are used for pre-existing conditions that pose a higher risk for the insurance company.
Year 1: Return of premiums paid + 10% interest
Year 2: Return of premiums paid + 12% interest
Year 3: 100% of the death benefits
Note: Accidental death in any year pays 100% of the death benefit
The critical thing to remember about modified burial plans is that it is worth shopping around at other carriers because clients may qualify for a graded plan with a different carrier. This could increase the payout to the beneficiaries as well as lower their costs.
Guaranteed issue final expense plans
The last type of plan is a guaranteed issue plan, meaning there are no health questions, and all clients will be approved. These plans work best for clients with pre-existing conditions that make them uninsurable in other cases. The payout schedule looks like the one below.
Year 1: Premiums paid + 5% interest
Year 2: Premiums paid + 7% interest
Year 3: Premiums paid + 10% interest
Year 4: 100% of the death benefit
Note: Accidental death in any year pays 100% of the death benefit
Therefore, being contracted with multiple carriers is crucial as a final expense insurance agent. You need to provide the best options for all the various underwriting situations you will encounter.
Some conditions that may result in guaranteed issue final expense sales include:
- Oxygen use
- Kidney failure or dialysis
- Recent heart attack
- Uncontrolled diabetes + other complications
- Recent organ transplant
It is vital to ensure you do an excellent job fact-finding with all clients because a prospect might seem like candidates for a guaranteed issue policy. Still, you might be able to place them on an excellent graded plan with another insurance carrier. It is also important to note that benefits and plans vary from carrier to carrier – they are not regulated the same way Medicare plans are.
Final expense has a vast target market, from those who cannot afford a pre-paid funeral, don’t want the funeral home as their trustee in a funeral trust, or want to protect their life savings. The common denominator is wishing to take the burden off their families.
The most lucrative final expense market ages 50-80 and those with a household income of $50k or less annually.
Understanding the funeral market
Stay updated on the industry; understanding consumer trends can significantly impact how you do out in the field meeting with prospects.
If you want to take your final expense career seriously, you need to start spending roughly $1,000 per week. If you have not yet saved up $5,000-$7,000 of disposable income, keep your current job until you have enough money to start working this way. Next is a breakdown of early expenses you might encounter
- 20 leads per week. It would be best if you committed to ordering new leads every week, at least at first. Facebook or internet leads are the cheapest, while direct mail can be the most expensive. If you are focusing on telesales, your lead counts will vary.
- Get a fax machine. Fax machines are the primary way some companies still like to submit applications. You can get traditional fax at home or online like RingCentral.
- E&O insurance. Most companies require E&O insurance. Expect to spend around $35 per month on E&O.
- Mapping software. This will allow you to enter leads and notes into a system and help you plan out your sales routes.
How to get started.
Step 1. Get a Life insurance License. If you have not already, the first thing you need to do is get licensed to sell life insurance. To get a life insurance license, you need to follow the state-required guidelines. Some states require passing a test, while others require an in-person course.
Step 2. Focus on Final Expense Insurance. Working in the senior market is a full-time position. They have unique attitudes and needs to attend to and learning to understand this market is not found online. Stay focused on your target.
Step 3. Invest in Your Business. Your costs may start around $2,500, but you could make as much as $109,000 in your first year. Take time to invest in yourself weekly.
Step 4. Find a Field Marketing Organization. An FMO, in short, works with agencies and insurance agents to provide insurance products. For example, at Agent Pipeline, we offer top-level contracts with many carriers for many different products – including Final Expense. We offer more than just contracts, though. We provide top-notch marketing support, back-end service, countless training opportunities, and many other services and resources.
Interested in contracting with Agent Pipeline? Call today at 800.962.4693