Many independent insurance agents start selling life insurance by offering small plans as add-on sales to Med Supp plans. These small plans are referred to as Final Expense, burial coverage, whole life insurance, or just "FE."
While it's no doubt that final expense sales can be lucrative, these insurance policies are truly a godsend for the families of the deceased.
I have heard of cases where a person dies and leaves their family with debt and final expense costs they can’t handle. Bankruptcy, GoFundMe pages, and more follow.
Ultimately, cross-selling final expense not only allows you to increase the policies you have in a household, but it fills a major need for your current Medicare clients.
What Is Final Expense Insurance?
Final expense insurance is a small life insurance policy that's used to cover funeral costs or any final bills associated with death (probate, outstanding debt, medical bills, etc.).
There are 4 different types of final expense insurance plans, including level, graded, modified, and Guaranteed Issue (GI).
Here’s a snapshot at how they’re different:
|Applicant Health||Excellent||Minor health conditions(s)||Serious health condition(s)||N/A|
|Benefits Eligibility||Immediately after death||2-year waiting period||2-year waiting period||2-year waiting period|
If you want more in-depth information on Final Expense product types, visit Final Expense Insurance: Level, Graded, Modified, and GI (2nd Edition).
How to Cross-Sell Final Expense with Medicare Supplements
There are two simple ways to start cross-selling final expense life insurance with clients who already have a Medicare Supplement.
The first option is only going to work for someone who already has a Medicare Supplement, and you're meeting to find a carrier with a lower premium.
Use Medicare Supplement Savings to Fund Final Expense
Whether your current client has taken a big rate increase or you're meeting with a new prospect that's simply paying too much for their Med Supp, you can put those savings to work.
If you save your client $50 per month on their Medicare Supplement, it's a good idea to show that client what that monthly amount would buy them for final expense.
You can also go about it as a package deal by saying that a Medicare Supplement and a Final Expense policy together will cost them exactly what they're paying now. It's up to you how you go about your presentation, but this scenario is an excellent way to show your client value without increasing their total premiums spent.
For example, a nonsmoking female that's 70 years old could buy a $13,000 death benefit from KSKJ Life for only $51 per month.
Now, you've not only saved your client money on their Medicare Supplement, but you've given them peace of mind that their family won't be burdened with their funeral costs.
Ask If Their Final Expenses Are Covered
The simplest way to cross-sell to current or new Medicare clients is to ask!
You can use the Client Needs Assessment (Question #8) to guide you: "Have you made any arrangements to take care of final expenses?"
If they haven't, a little education on funeral costs and other costs their family might take on is a perfect segue.
Average Final Expense Costs
There's a lot of information on the costs of funerals, but here are some statistics we've found that you're more than welcome to copy and use in your presentations:
- According to the National Funeral Directors Association, the median out-of-pocket funeral expenses for 2016 is $7,360.
- According to the National Bureau of Economic Research, the average out-of-pocket expenditure for end-of-life necessities is $11,618.
Those out-of-pocket expenditures are mainly medical bills, but it also includes things like taxes and probate.
If you add these up, the total final expenses for the average person is just under $19,000. This varies by state, though. For example, in Illinois, the average is $20,314. In Hawaii, the average is $41,467. However, in Mississippi, the average is $18,509.
Coach up your client so that they understand a final expense plan is essential!
What Carriers Offer Final Expense Insurance?
New Horizons represents 11 Final Expense carriers, including:
- Mutual of Omaha
- Royal Neighbors of America
Here's a look at how these final expense carrier compare and differ:
|Death Benefit||Issue Ages||Features|
|AIG||$5,000-$25,000||50-85||Very high comp, same-day approval|
|Americo||$2,000-$30,000||50-85*||Quit Smoking Advantage, 8% bonus program, Point-of-sale underwriting decision|
|Foresters||$2,000-$35,000*||50-85*||Fraternal benefit society, no medical testing|
|Gerber||$5,000-$25,000||50-80||No medical exams, 2-year graded benefit|
|KSKJ||$5,000-$25,000*||50-80||Not-for-profit organization, Living Benefit Rider|
|Mutual of Omaha||$2,000-$40,000*||45-85*||Simplified underwriting, iGo e-App|
|Oxford||$5,000-$30,000||50-85*||Single premium option, Immediate approval decision|
|Royal Neighbors||$5,000-$25,000*||50-85||Fraternal benefit society, Accelerated Living Benefit Rider|
|Sentinel||$1,000-$35,000*||45-85*||First day coverage available, assignable to a funeral home if desired|
|Transamerica||$1,000-$30,000||0-85*||10-Pay option, no waiting period for coverage to begin|
*Aetna Graded up to 80; Modified up to 75
*Americo Eagle Guaranteed plan up to age 80
*Foresters Modified plan up to age 80
*Foresters Max Face Amounts differ by age
*KSKJ Modified Max Face Amount is $15,000
*Mutual of Omaha Issue ages 45-80 on Graded plan
*Mutual of Omaha Graded Max Face Amount is $20,000
*Oxford Assurance One Issue Ages 55-85
*Royal Neighbors of America Graded Max Face Amount is $10,000
*Sentinel's Issue Ages and Face Amounts vary greatly by age and payment type
*Transamerica Face Amounts vary by age and product type
*Transamerica Easy Solution Issue Ages 18-80
The carriers we recommend most often are:
- AIG (GI)
- Gerber (GI)
Get Started With Contracting
That's really all there is to it. Final expense is one of the easiest cross-selling products to get started with, because it's easy to understand, and there's a very clear need for it.
There are also Guaranteed Issue options from carriers like AIG and Gerber, so even if you have a client with a major health condition, we can still find them a home.
To get started, all you really need to do is request contracting. I can help you choose a carrier or two to get going – my recommendation is going to be based on which state you're in as well as who is showing the most competitive premiums right now.
Call me (Kirk) at 888-780-7676 for more information, or you can even email Ginny Dunker to get contracting started. Thanks for reading, and happy cross-selling!