Hello agents and prospective agents, I am Matt McCray, agent and success coach here at FEXsuccess.com. Final Expense Insurance Basics. Today we are going to discuss the basics of final expense: what is final expense, what’s the market like, we are going to give you a basic overview of exactly what final expense is. Now what I’ve done for this video is created a power point, so I’m going to turn off the video of me, we are going to move into a power point presentation and kind of go through the Final Expense Insurance Basics.
Final Expense Insurance Basics
So here’s the power point we are going to go over this morning. Final Expense Insurance Basics. So what is final expense insurance? Well it’s typically a whole life insurance policy which people purchase for taking care of their final expenses. Now there final expenses are typically funeral, burial and expenses that are associated with that. Final Expense Insurance Basics, other things that final expense insurance can be used for, gifts to grandchildren, charity, charitable donations, surviving spousal income, pretty much a ton of things now these policies are simpler to qualify for, they are based on answering just a few health questions on the application.
The Market Final Expense Insurance Basics
So whose the target market with this? Final Expense Insurance Basics, Typically it’s going to be people who are 40 to 85 years old, that’s what the carriers are going to design the programs for typically. Lower to middle class income levels and all income classes can qualify so basically you’re going to target the lower to middle income class because those are the people who typically purchase this type of insurance, but you can sell it to anybody through any income class.
Different Types Final Expense Insurance Basics
So what are the different types of final expense? It’s basically broken down into 4 different types. There’s a level death benefit, their going to qualify for this if they can answer all of the health question son the application No and on this type of policy there’s going to be no waiting period, its going to be a level death benefit whether the person passes away after the first month they purchase it, or if its 5 years later or 3 months later or whenever they pass away, they have an immediate death benefit, they have a level, it’s the amount of life insurance they purchased. Final Expense Insurance Basics.
So the next option is going to be the graded benefit. This is going to be for people who have some health issues, they’ve answered most of the questions on the application no there may be one or two health conditions that they might have, taking some prescriptions or something like that. Now this type of policy the benefits are going to be graded for the first 2-3 years depending on the carrier. Final Expense Insurance Basics, What I mean by graded is each carrier has their own rules but a lot of times the way it works out is if somebody passes away during the first year the beneficiary is going to receive 30% of the face amount so if they purchased a $10,000 policy once they pass away the person is going to receive 3,000, if they pass away during the second year the beneficiary is going to receive 70% or 7,000 if they pass away 3rd year or longer the beneficiary will receive the full $10,000. Now on the graded policies if the person passes away and its not based on a health condition but its more of an accident so that’s going to be considered accidental death and its not going to matter at that point when they die whether its 6 months in or a year or two years, their going to receive the full death benefit.
The next one is modified and this is going to be somebody who typically has more health issues but they can still qualify. So on a modified plan the death benefit is going to be paid out similar to a graded policy and it varies by each carrier how much the beneficiary is going to receive. But typically on a modified policy its gonna be a return of premiums paid during the first 2 or 3 years plus 10% or some number like that, every carrier is going to be slightly different so check with the carriers your riding with to make sure you understand how their plans work.
The next type is going to be a guaranteed issue policy, now the guaranteed issue policy is going to be for somebody who is very unhealthy, this is a last resort option it could be somebody that is currently going through cancer treatments, somebody who has aids or hiv, somebody who typically can’t get you know either a level graded or modified plan, but always use this as a last resort option. This one typically, every time you do a guaranteed issue depending on the carrier again, its going to pay benefits out like a graded or modified benefit so its going to have that waiting period for 2 to 3 years just depending on the carrier.
Final Expense Insurance Basics The Carriers and their applications
Its very important that when you are marketing final expense that you’re going to know your carriers and applications. That way you know how to qualify somebody whether they are going to be the level, graded, or modified or if you have to go to one of the guaranteed issue plans. So here we’ve created for our agents a which carrier to use cheat sheet, now this which carrier to use cheat is a great tool you should put it in your briefcase carry it with you on every appointment. It list out the carrier, it list out the health condition and its going to tell you based on the carrier and health condition whether its going to be a level benefit, if its gonna be a decline, if its gonna be a graded or modified. Or if it says decline and all the carriers say decline then at that point you’re going to know to go to a guaranteed issue. This chart also implements the height and weight chart from all of the carriers we work with so you’re going to want to make sure that you understand you review the height and weight chart.
The next important thing about knowing your carriers is really gotta read it, study the applications, got to study and understand the agent guides and follow this chart, use this chart as a guideline, you really need to know this information.
We also recommend that you’re going to have more than one carrier. There’s a lot of agencies out there that are captive agencies you’re only working for one carrier we typically never recommend that, you’re a slave to that carrier, you can only offer their products and that gives you no chance to shop around fir your clients and give them the best deal. So its very important that your looking and are able to shop around a handful of carriers. You don’t have to go out and get 20-30 carriers because that’s insane, nobody would want to do that and there’s way too much to understand and learn but typically if you have 3 to 5 carriers, you’re gonna typically use 1 to 2 of them for your go-to carriers your primarily going to be writing those carriers and then your going to have a guarantee issue if its available in your state. Some states don’t have the guarantee issue some states don’t even have the modified benefit plans and why its important to have more than one carrier here is going to illustration here: lets say your sitting down with somebody, 72 year old female she ahs COPD, well if you work in a place with one carrier, we will call it carrier 1, with COPD she could apply for coverage and pay $81.41 for her premium, now if you look at carrier 2, they are not so friendly with COPD there going to only offer her a graded benefit, its going to be $93.42 and then we have same exact situation, we have another carrier that we could take a look at with this lady, and that would be carrier 3 she’s only going to qualify for a modified benefit with that carrier so its going to be 103.66 so as you can see here understanding and knowing your carriers, using the carrier cheat sheet your going to get a better understanding of which carriers are going to be best suited for your individual clients.
Final Expense Insurance Basics Follow us!
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