Pre-Need V FE V Life Insurance

[WinoBlues]

I have always be of the mind that Pre-need, Final Expense, Mortgage Protection and such were just life insurance with marketing wrappers.

I am partially re thinking that.

A client called me to ask some questions about a pre need plan he and his wife were looking at. My fist inclination was to get defensive as another agent was in one of _my_ houses. As we talked he tells me the PN guy suggested that they look at converting the wife's policy. He was going to take care of the funeral cost. Something I have been trying to do for years. But he was not going to replace or convert the term. I was amazed. He was leaving over $3,000 on the table. He was there to take care of the funeral and cemetery cost, period.

As I am talking to my clients I am trying to explain that he already has plenty of insurance to cover all the cost. And she will also. (Once we convert the term.) But they were adamant that the PN was different and not insurance. The light finally clicked on and I shut and agreed.

I have a lot of orphaned PN policies. I have left them alone or tried to write FE on top of them. Really tough to replace them. People hold onto them like they are family treasures.

I have no desire to do all the pre planning involved in pre need. And have always seen those agents as competition. Maybe I have been wrong. Are most pre-need guys strictly Pre-need?

Lee

 

[Newby]

I have always be of the mind that Pre-need, Final Expense, Mortgage Protection and such were just life insurance with marketing wrappers.

I am partially re thinking that.

A client called me to ask some questions about a pre need plan he and his wife were looking at. My fist inclination was to get defensive as another agent was in one of _my_ houses. As we talked he tells me the PN guy suggested that they look at converting the wife's policy. He was going to take care of the funeral cost. Something I have been trying to do for years. But he was not going to replace or convert the term. I was amazed. He was leaving over $3,000 on the table. He was there to take care of the funeral and cemetery cost, period.

As I am talking to my clients I am trying to explain that he already has plenty of insurance to cover all the cost. And she will also. (Once we convert the term.) But they were adamant that the PN was different and not insurance. The light finally clicked on and I shut and agreed.

I have a lot of orphaned PN policies. I have left them alone or tried to write FE on top of them. Really tough to replace them. People hold onto them like they are family treasures.

I have no desire to do all the pre planning involved in pre need. And have always seen those agents as competition. Maybe I have been wrong. Are most pre-need guys strictly Pre-need?

Lee

Yes. Most Preneed agents do NOT sell anything except Preneed insurance. It is very different from FE insurance. They are actually buying a prepaid funeral. The insurance or bank trust is simply the funding vehicle but it is actually a paid in full funeral contract. They are often irrevocable and can not be canceled in any way other than stop making future premiums. It would go RPU but no money could be given back until the insured dies. They can transfer to a different funeral home anytime they want to.

The first 10-years that I sold Preneed, if someone couldn't afford to preplan and was simply a candidate for FE, I would refer them elsewhere.

Preneed agents generally see FE as an inferior product and refuse to sell it. Funeral homes have MANY bad experiences with FE that is contested in the early years or simply underfunded due to no inflation protection on the older policies. It's also much slower to get their money from most FE insurance companies. That puts the family in a bad position since most funeral homes now require full payment prior to the funeral. Most FE policies don't pay that quickly without involving a 3rd party funeral funding company and adding an additional fee.

There are very few agents that do both FE and Preneed. I do a pretty fair volume of each. I see the benefit of both products but it's a hard sell for me to get other Preneed agents and funeral home owners to understand that they should offer both options.

 

[SWM]

This is an interesting thread. I do niether Pre need nor FE, but it sure helps to understand the concepts. Would you guys say the target audience is the same or a different crowd for each?

 

[Newby]

This is an interesting thread. I do niether Pre need nor FE, but it sure helps to understand the concepts. Would you guys say the target audience is the same or a different crowd for each?

As a general rule more affluent people do Preneed plans and low income people do the final expense plans. There is a little crossover but not too much.

 

[SWM]

As a general rule more affluent people do Preneed plans and low income people do the final expense plans. There is a little crossover but not too much.

Ignorance on my part here....Is pre need anything like pre paid?

 

[WinoBlues]

Yes. Most Preneed agents do NOT sell anything except Preneed insurance. It is very different from FE insurance. They are actually buying a prepaid funeral. The insurance or bank trust is simply the funding vehicle but it is actually a paid in full funeral contract. They are often irrevocable and can not be canceled in any way other than stop making future premiums. It would go RPU but no money could be given back until the insured dies. They can transfer to a different funeral home anytime they want to.

The first 10-years that I sold Preneed, if someone couldn't afford to preplan and was simply a candidate for FE, I would refer them elsewhere.

Preneed agents generally see FE as an inferior product and refuse to sell it. Funeral homes have MANY bad experiences with FE that is contested in the early years or simply underfunded due to no inflation protection on the older policies. It's also much slower to get their money from most FE insurance companies. That puts the family in a bad position since most funeral homes now require full payment prior to the funeral. Most FE policies don't pay that quickly without involving a 3rd party funeral funding company and adding an additional fee.

There are very few agents that do both FE and Preneed. I do a pretty fair volume of each. I see the benefit of both products but it's a hard sell for me to get other Preneed agents and funeral home owners to understand that they should offer both options.

Thank you.

How do they see Life Insurance in force? Such as $100,000 WL or UL? Seems that paying a couple hundred dollars in 3rd party fees is cheaper than a pre-need. Then again price locking has some value.

Lee

 

[Newby]

Ignorance on my part here....Is pre need anything like pre paid?

Two names used for the same thing. Also called Funeral Trusts, funeral insurance and some consumers call them ForeThought plans even though many are not with ForeThought Life Insurance.
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Thank you.

How do they see Life Insurance in force? Such as $100,000 WL or UL? Seems that paying a couple hundred dollars in 3rd party fees is cheaper than a pre-need. Then again price locking has some value.

Lee

When people prepay their funeral or cemetery spaces or mausoleum or cremation or any of that they really don't associate it with their insurance. They want it bought and paid for. It's completely different than the mindset of people buying insurance.

 

[Jake07712]

They want it bought and paid for. It's completely different than the mindset of people buying insurance.[/quote]
When people bring up their larger life policies, I generally point out that life insurance is to protect their family to replace income. FE is so the family doesn't lose a big chunk of it to pay for burial expenses. They work hand in hand with each other. I have also seen life insurance take as long a month, and in some cases more, to pay. FE is designed to pay fast so that no one has to scrape and borrow to get enough money fast.

 

[WinoBlues]

They want it bought and paid for. It's completely different than the mindset of people buying insurance.

When people bring up their larger life policies, I generally point out that life insurance is to protect their family to replace income. FE is so the family doesn't lose a big chunk of it to pay for burial expenses. They work hand in hand with each other. I have also seen life insurance take as long a month, and in some cases more, to pay. FE is designed to pay fast so that no one has to scrape and borrow to get enough money fast.[/QUOTE]

I guess that is my point. The mindset is that it is a funeral payment, Not Insurance to pay for the funeral. As I saw Pre-need.

 

[Newby]

When people bring up their larger life policies, I generally point out that life insurance is to protect their family to replace income. FE is so the family doesn't lose a big chunk of it to pay for burial expenses. They work hand in hand with each other. I have also seen life insurance take as long a month, and in some cases more, to pay. FE is designed to pay fast so that no one has to scrape and borrow to get enough money fast.

I guess that is my point. The mindset is that it is a funeral payment, Not Insurance to pay for the funeral. As I saw Pre-need.[/QUOTE]

Preneed is seen more like financing. Similar to a car payment. When you explain to them that if they die before it is paid off, the policy will pay the funeral off (since it is funded with an insurance policy) the customer is always surprised to learn that. They didn't expect that and it has nothing to do with their reasons for preplanning.