Some funeral homes are directly connected with agents that write policies for funeral cost ? Or the director himself writes a policy for the proposed insured to cover costs?
Burial Policy
- Thread starter Coloradoskier
- Start date
- 16,905
Give me a call sometime and I'll bring you up to speed on this. Every funeral home in the country with very few exceptions has a pre-need agent. That's how I first got in the biz back in 1996.
The funeral home I sold at had six of us agents working at the FH and six more at their cemetery. We had huge production.
Most funeral homes are much less aggressive on their marketing but most have at least one full time agent.
- 25,010
Am I correct that those are trust plans?
Thanks for the help
- 16,905
When PreNeed is sold by a funeral home it's usually in a trust. But the trust is only irrevocable if they are on Medicaid in most states.
But a trust has to have a funding vehicle. Most funeral homes use pre-need life insurance for that. But the ones that are only dollar for dollar would be a bank trust or an annuity. The majority are going to be life insurance.
TxJohnny
Super Genius
- 126
I don't follow the logic here. Why would dollar for dollar on a terminal person be idiotic? Presumably the heirs would pay the balance owed upon death.
- 16,905
Because the pre-need insurance will give them much more for their money. 8% interest at a minimum compared to the bank trust at less than 1%.
Many terminally ill people live longer than expected and could make it 6-months or 12-months where they have a much better insurance benefit. I've had many, many of those through the years.
- 3,764
i would avoid recruiters on this forum.
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- 1,405
I didn't say life insurance is a game, I said:
"I am also bewildered by people who think they are going to buy a life insurance policy that beats the life insurance company at it's own game."
The "game" I am referring to is the process by which a life insurance company builds a life insurance product, in order to make money. This takes into account ALL the factors, mortality, expense, lapse ratio, etc. It was by no means a derogatory comment, it underlines the fact that life insurance company actuaries are very good at what they do.
If you buy a $25,000 FE policy, with premiums of $2,500 per year, and think it's a bargain because you will be dead in a couple of years, then you are likely making a serious misjudgment. Companies don't issue policies to people where the company plans to lose money.
I suspect the dirty little secret on Final Expense products is that the lapse rates are very high, and many won't pay a death benefit. After pumping in thousands of dollars, consumers are likely to walk away before a death benefit ever pays.
I suspect that the lapse rates are high because of "who" these products get sold to. Normally I would expect a person who has properly planned their finances will have lots of assets to deal with the relatively minor cost of a funeral. Those looking for a burial policy are probably doing so because they have insufficient assets to pay that cost. TRANSLATION: The person is financially stressed. Thinking they can afford the policy, they buy it to later discover they can't keep up with the premiums. The question is, how long before that happens, and how many people are in that situation?
That situation is doubly complicated if they have a health condition which makes them believe they won't be around long. It is quite likely that the costs of that health condition will become greater, and add to the financial stress.
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