FE Question From New Agent

[KenoKat88]

Hi,

I just got off the phone from a webinar presentation on Final Expense (Foresters PlanRight). I asked about, if a client purchases a FE policy with low face amount and a low age what would happen to any overpaid premiums. The answer I got was nothing, they only get the face amount for the death benefit. They also said this common with all companies and FE products.

I'm a new agent and I just want to verify this information. Is there companies that would pay the death benefit + over paid premiums? Or do I carry a calculator and sell Whole Life if the math works in the clients favor?

Thanks!

 

[VolAgent]

This is going to sound harsh, but it is reality.

Do you know how long a person is going to live? How do you know they will overpay?

The person could drop dead as soon as the ink is dry and have a valid claim. These policies are priced on the assumption that a person won't live terribly much longer. And there is no company on earth that will pay more than the death benefit. You could look into participating products, but even then there are situations where a person may pay in more premium than benefit received.

 

[jdeasy]

Hi,

I just got off the phone from a webinar presentation on Final Expense (Foresters PlanRight). I asked about, if a client purchases a FE policy with low face amount and a low age what would happen to any overpaid premiums. The answer I got was nothing, they only get the face amount for the death benefit. They also said this common with all companies and FE products.

I'm a new agent and I just want to verify this information. Is there companies that would pay the death benefit + over paid premiums? Or do I carry a calculator and sell Whole Life if the math works in the clients favor?

Thanks!

You got the correct answer to th question you asked. Plus, the lowest age for PlanRight is 50.

You are asking about an increasing death benefit, not the additional premiums. That's a whole diferent ballgame.

There are no "overpaid' premiums in whole life. The premiums are what they are. You are confusing dumping additional money into UL's. Or, at least, that seems to be what you are asking about.

 

[Newby]

What are you asking?

I think your question might be, what happens if they pay more in premiums than they have in face amount?

If that's the question they told you right. That's the risk of financing the life insurance over a long period of years.
Young people should not buy lifetime premiums. They should take 10 or 20 year pay.

 

[KenoKat88]

Thanks. It does make sense and I understand they have the protection and can't pick what day they die. I have just been going over scenarios on paper. I was talking to a 54 year old that just wanted enough coverage for cremation and small face amount. Then when I did the math, he would be paying above the face amount in less than 10 years.

A friend of mine works pre-need funeral and she swears Lincoln Heritage will pay back any amount over.

 

[GreenSky]

Thanks. It does make sense and I understand they have the protection and can't pick what day they die.

That is not always correct. As long as they wait 2 years.

Rick

 

[VolAgent]

A friend of mine works pre-need funeral and she swears Lincoln Heritage will pay back any amount over.

Unless it says so in the policy, she is wrong. Hopefully just misinformed, but just as wrong.

 

[KenoKat88]

Thanks everyone for the comments! Like I said, I'm new at this and I guess I'm still in the "selling myself on the products..before I can sell to clients" stage. I'm only appointed with Foresters right now for FE. Glad to know it's industry standard and not a Foresters PlanRight glitch!

 

[Newby]

Thanks. It does make sense and I understand they have the protection and can't pick what day they die. I have just been going over scenarios on paper. I was talking to a 54 year old that just wanted enough coverage for cremation and small face amount. Then when I did the math, he would be paying above the face amount in less than 10 years.

A friend of mine works pre-need funeral and she swears Lincoln Heritage will pay back any amount over.

I can guarantee you it doesn't. But your friend MAY not know any better. Many preneed agents are funeral directors and they are usually DANGEROUS at explaining how any type of life insurance works.

If he's not a funeral director he may have been trained by a funeral director.

A preneed policy will pay any OVERAGE back to the beneficiary just like ANY FE policy will. So if their preneed policy is worth $12,000 and their funeral (on the day of their death NOT the day they preplanned it ) is priced at $9,000, the extra $3,000 will go to their beneficiary.

If their funeral is $9,000 but they paid $14,000 in premiums they get nothing back. This is true for preneed as well as final expense.

 

[Franz Kafka]

A preneed policy will pay any OVERAGE back to the beneficiary just like ANY FE policy will. So if their preneed policy is worth $12,000 and their funeral (on the day of their death NOT the day they preplanned it ) is priced at $9,000, the extra $3,000 will go to their beneficiary.

If their funeral is $9,000 but they paid $14,000 in premiums they get nothing back. This is true for preneed as well as final expense.

I read this 5 times and still don't get it. What is "overage"?