Funerals can be a financial as well as emotional burden for families without the proper planning. Help prospects with informative final expense advice that can give them and their loved ones peace of mind.
Many of your prospects and clients would be shocked to learn how expensive a funeral can be. According to the National Funeral Directors Association, the median cost of a funeral stood at $7,360 in 2017.
Without a savings account set aside for funeral expenses or a substantial life insurance policy, your client’s family will likely have to pay that amount with their own funds. Fortunately, as their agent, you have an insurance product that protects them against that risk: final expense insurance. Unlike life insurance, which is designed primarily for income replacement after the death of a breadwinner, final expense insurance covers only the cost of a funeral. As such, a policy’s death benefit rarely exceeds $20,000.
While that payout may be low compared to a typical term or permanent life policy, final expense insurance eases the financial burden of paying for a funeral. It also alleviates stress at a difficult time for family members. For that reason, be prepared to discuss final expense insurance with your prospects, and know how to position this type of policy as an important addition to an existing insurance portfolio. To get the discussion started, ask these three questions:
1. Have you or anybody you know had to pay for a funeral, and, if so, were ample funds available?
According to a 2016 “Life Happens” survey from LIMRA, many of your prospects and clients are aware that funerals may unexpectedly deplete a family’s savings. More than 50% of the survey respondents said that the primary reason for buying life insurance was to cover burial costs. Regardless of whether your client has life insurance or not, asking this question will only reinforce the importance of providing for their family after their death.
If they don’t have a life insurance policy, see whether they have enough saved to pay for a funeral. Even if they do hold term or permanent life insurance, they may want all of the payout to go to their beneficiaries, not their funeral. A final expense policy provides an extra financial cushion beyond life insurance.
2. How much can you afford for the premium?
Ask your client or prospect how much they can reasonably afford to spend each month on a final expense policy. Then, present them with a variety of options that meet their budget while providing enough funds to cover the essentials.
They can adjust the amount they want to pay each month by lowering or raising the death benefit. Once a client or prospect buys a final expense policy, the rates and benefits remain the same, and the policy cannot be cancelled.
3. Do you have any preexisting health conditions I should know about?
Although a final expense insurance policy doesn’t require a medical exam, applicants need to answer several basic health questions. Under this simplified underwriting process, your client has a better chance of being approved, but the premiums will typically be higher than for term life insurance.
For clients who want to forego any health questions, they can apply for a guaranteed issue policy, which, as the name implies, ensures approval. The insurer will charge more for that type of policy, however.
Before guiding clients through the application process, agents must learn about any health conditions that could affect their rates or their ability to get coverage. Some conditions, such as diabetes, heart disease, or dementia, may disqualify your client.
While your clients may not want to think about funeral expenses, they also don’t want to leave that financial burden to their families after they pass. A final expense insurance policy helps give everyone involved peace of mind.