Final Expense And Other Expenses..

[Cornelius]

When looking at Final Expense do people look at mostly just the cost of a funeral or are potential probate expense also considered? I am assuming most people who purchase FE may not have much in assets due to the coverage amounts but do agents who market FE bring up the potential for other expense such as settling the estate?

 

[donamese]

Most clients tend to just look at the cost of the funeral and typically under estimate the cost. Finding out what they can afford is key. Remind them of inflation and the cost of funerals goes up annually. Then evaluate other expenses that may be incurred (credit cards, auto, etc). Then there is whether they want to leave anything for their children or grandchildren, possibly a charity?

You want to maximize what they can afford, but you do not want to stretch them thin where you will have a chargeback in a few months.

 

[Newby]

You just have to fact find. Many aren't using it for funeral or cemetery expenses at all. They just want to leave money to someone.

 

[Cornelius]

I understand the part about the sale bit i was listening to something today about Living Trust and I just thought about the potential cost of probate because every now and then people will post about seniors in upper ages looking for a FE.

Using Calif. as an example what if a Senior had a paid for home with a current value of say $200,00K and they pass. To keep it simple when looking at the fee schedule there's a potential cost of $14,000 to probate the estate. probate and estate fees schedule in California (I just found a site that list fees just to use as an example)..So if that person is looking for a FE of say $10K for a funeral then there's maybe no other asset for the probate side. Then again I guess that why we see estate sales happening..

Well here I go over thinking something again...

 

[Tearmann]

I understand the part about the sale bit i was listening to something today about Living Trust and I just thought about the potential cost of probate because every now and then people will post about seniors in upper ages looking for a FE.

Using Calif. as an example what if a Senior had a paid for home with a current value of say $200,00K and they pass. To keep it simple when looking at the fee schedule there's a potential cost of $14,000 to probate the estate. probate and estate fees schedule in California (I just found a site that list fees just to use as an example)..So if that person is looking for a FE of say $10K for a funeral then there's maybe no other asset for the probate side. Then again I guess that why we see estate sales happening..

Well here I go over thinking something again...

That is a great idea for those Seniors in a good financial position. Most agents selling final expense market to Seniors in lower income brakets and most likely do not own a home in the 200K range. However, this info may open up a broader market of folks.

 

[ActingBoss]

I understand the part about the sale bit i was listening to something today about Living Trust and I just thought about the potential cost of probate because every now and then people will post about seniors in upper ages looking for a FE.

Using Calif. as an example what if a Senior had a paid for home with a current value of say $200,00K and they pass. To keep it simple when looking at the fee schedule there's a potential cost of $14,000 to probate the estate. probate and estate fees schedule in California (I just found a site that list fees just to use as an example)..So if that person is looking for a FE of say $10K for a funeral then there's maybe no other asset for the probate side. Then again I guess that why we see estate sales happening..

Well here I go over thinking something again...

You're not over-thinking anything, in fact your reasoning is quite sound.

In fact, you've stumbled onto something here but you don't know it yet.

Hardly ANY of my clients (('m just doing FE right now) have either a Will or Power of Attorney. So when I fact-find I always ask them if they do and if they are aware of how much probate can cost in SC........when this is injected into the discussion, you are then seen as an advocate, just not some hump sellin' LI they'll never hear from again once the check clears.....then I'm able to transition easily into a total FE plan.........the funding (they love that word), the pre-planning (don't start, LH haters), the caring (power of attorney) and the settling.......call the components what you want but it all fits in together, a total FE package, and 3 of the 4 components are free.

Google free will kits and POAs, or try Markingriffin, or go to LegalZoom.com and buy one for California, then offer them as free value-addeds in your presentations.....then watch their defenses lower and expressions change.

Make SURE you don't set yourself up for practicing law without a license, however.

 

[Cornelius]

I do offer a legal plan that way people can speak with an Attorney to see which is the best way to go just in case something like a trust is a better option or even with wording of beneficiary designations. Also many of the free kits (If not all) suggest people have an attorney review the documents but i've heard people say in passing some Lawyers won't review Wills and such unless they prepared them..

The part that threw me for a loop was the potential cost of Probate given in the example.. Having a home along with other lifetime assets can get a person over 200K pretty fast.. So when looking at the example can you imagine the war after one family member finds out the named executor can be paid $7,000 from the $200K estate unless of course they turn it down?

 

[Biggin]

Just humbly opining here, but, if you have a client with any "estate planning" needs then you shouldn't be selling siwl. I've sold a LOT of FE in my day but I always want to keep in the back of my head whether they could afford the 25K minimum face of a GUL. If they can, they can get a heck of a lot more Death benefit for the money. Ex. 60 yr. old female can get GUL for $80/month with $50k death benefit OR you can slam her into a $25k siwl for $80/month. Now I'm assuming she can pass (and is willing to take) a paramed and full underwriting. And, yes, I know it's more work for less money. But look at the bright side.........
Anyway, the way I look at it FE is great if they can't afford the higher premium or can't pass the underwriting of a GUL, WL or some other permanent life policy.

The rates quoted above are for entertainment purposes only. I'm writing about a concept, not a case study.

 

[Newby]

Not everyone chooses GUL over whole Life even though it's cheaper.

I met with a lady recently that was married and wanted $50,000 on herself. She had a few health issues where she would not have gotten better than standard and probably would be tabled up.

I explained it that we could do either app today. I knew I could get her preferred rates with a couple of FE companies today. $50,000 would cost her around $200 monthly.

With the GUL we do a paramed. Best case for her would be around $130 GUL but most likely tabled to $160 or $175.

With the FE if she outlives her husband and wants to lessen her monthly bills 25 years from now she can cancel one or both policies and have cash in hand and eliminate the premium(s).

With the GUL it's death benefit only. If she has no need for the insurance when she is 85 or so she can cancel and walk away but she can't reduce it or get cash back.

For her it was a no brainer. She wanted the whole life.

If she would have been perfect health I would have explained underwritten whole life compared to GUL.