Replaced by LH

[cladams]

I am new to the FE world, only cross-selling MA clients for the past few months, so I am raw. This has been my only dealing with LH.

I replaced an LH policy of one of my MA clients in April. I was able to increase her DB by 2K for $2.00 / mo. She had 6K for $34.00 - I got her 8K for $36.00 (5 Star). She still had a year of contestability left. Last week I noticed that the policy had terminated. So I called the client to see what was the reason for the termination of the policy. I finally reached her today to find out that she went back with LH.

I asked her if she went back to the 6K DB that she had with them before. She said it was for the 6K, but the cost went up to $39, since she had a birthday in July. I asked her what persuaded her to pay MORE for LESS coverage. She mentioned that the agent informed her that they would take care of the arrangements of her funeral, and that the family would not have to do this.

The bottom line is that the agent convinced her to pay a few dollars more per month for 2K less in coverage. She did mention that she would rather do business with me, as she said the LH agent was "pushy" (obviously very persuasive at least). I am optimistic that I will get this one back, but I do want to know what I am up against with this "funeral arrangement benefit."

Here are my questions:

If a replacement form is submitted to a company, in which an agent is replacing an existing policy with a policy that cost more for less coverage - is the company obligated to not allow that replacement to take place? If not, why do we fill out "replacement forms?"

Does LH actually do the funeral planning? Is this a legitimate benefit, which would justify paying more for 2K less in coverage?

Thanks!

 

[jdeasy]

The company will gladly take any replacements and they don't care if it's in the best interest of the client. Replacement form are just a way to lay blame on the agent in the event that solmething goes wrong.


As for the LH FCGS, {Funeral Consumer Guardian Society}, it is a marketing tool. It is no more than a glorified funeral planning guide book that almost every FE company will provide. It is not in any form or fashion a funeral preplan and it is illegal for an agent to present it that way. However, you will find many LH agents that do exactly that.

This is hard to admit, and I was baffled. I am new to the FE world, only cross-selling MA clients for the past few months, so I am raw.

I replaced an LH policy of one of my MA clients in April. I was able to increase her DB by 2K for $2.00 / mo. She had 6K for $34.00 - I got her 8K for $36.00. She still had a year of contestability left. Last week I noticed that the policy had terminated. So I called the client to see what was the reason for the termination of the policy. I finally reached her today to find out that she went back with LH.

I asked her if she went back to the 6K DB that she had with them before. She said it was for the 6K, but the cost went up to $39, since she had a birthday in July. I asked her what persuaded her to pay MORE for LESS coverage. She mentioned that the agent informed her that they would take care of the arrangements of her funeral, and that the family would not have to do this.

The bottom line is that the agent convinced her to pay a few dollars more per month for 2K less in coverage. She did mention that she would rather do business with me, as she said the LH agent was "pushy." So I am optimistic that I will get this one back, but I do want to know what I am up against with this "funeral arrangement benefit."

Here's my questions:

If a replacement form is submitted to a company, in which an agent is replacing an existing policy with a policy that cost more for less coverage - is the company obligated to not allow that replacement to take place? If not, why do we fill out "replacement forms?"

Does LH actually do the funeral planning? Is this a legitimate benefit, which would justify paying more for 2K less in coverage?

Thanks!

 

[cladams]

Thanks JDeasy, I appreciate the feedback! So, if I understand correctly the FCGS does not actually handle the arrangements of the funeral.

My client does not want her children to handle her arrangements, as she does not trust them. Thus far I have advised clients not to make the Funeral Home the bene, as they might be inclined to make the funeral cost to coincide with the DB. Perhaps in this situation it would be best to make a Funeral Home the bene, and make sure that she has a "Planning Guide" on file with them. This would insure that her children would not mishandle the money that is intended for her FE.

 

[jdeasy]

First, the FCGS will not do anything on a contestable policy. Now one LH recruiter here says differently but he is a recruiter.

The president of the FCGS told me directly that they do not work with contestable claims. Newby has had first hand experience with the FCGS at some of the funeral homes and they would not even help with paperwork on a contestable claim.

On non contestable claims they will follow the wishes that the policy owner spelled out in the paperwork and sent to them. If the person did not write everything down and send it to the FCGS then no, it will not be done to their wishes because the FCGS doesn't know what they are.

She could do the same thing with any planning guide. But, if she thinks the FCGS is a good deal then she can buy it straight from the FCGS for about $6/mo without having to have an LH policy.

The selling point of the FCGS is that on non contgestable claims they will pay the funeral homes within 24 hours of death. They use that as a ploy to try and negotiate a lower price. It sounds good on the surface but in reality all it does is make the funeral a bad experience for the family because the FCGS has pissed off the funeral home. It's not even a real negotiating tool because every funeral home in the country can get paid within 24 hours anyway on non contestable claims.

The FCGS is smoke and mirrors. I also recently met with a lady that was told by an LH agent that they had a free funeral "preplan" with all policies. That's illegal because it's not true.

I used to write LH and I also oversold the FCGS because that's how I was taught by them. I thought that the paying in 24 hours was a great negotiating tool because I didn't know back then that any funeral home could get paid quickly.

I would bet the agent you are dealing with is not dishonest. Just saying what he was told to say and doesn't know any better.

Thanks JDeasy, I appreciate the feedback! So, if I understand correctly the FCGS does not actually handle the arrangements of the funeral.

My client does not want her children to handle her arrangements, as she does not trust them. Thus far I have advised clients not to make the Funeral Home the bene, as they might be inclined to make the funeral cost to coincide with the DB. Perhaps in this situation it would be best to make a Funeral Home the bene, and make sure that she has a "Planning Guide" on file with them. This would insure that her children would not mishandle the money that is intended for her FE.

 

[Jake07712]

If nothing else, LH does have a great marketing tool. I don't come up against them often, but if the plan is sold right, I find it very tough to get someone to replace it on the basis of price.

 

[jdeasy]

If nothing else, LH does have a great marketing tool. I don't come up against them often, but if the plan is sold right, I find it very tough to get someone to replace it on the basis of price.

I find it just the opposite. It's hard to keep from smiling when I find out they have LH.

 

[Newby]

If someone really believes that the FCGS is a good thing, they can buy it for $295 total or add their spouse for en extra $100. see link: http://funeralconsumer.org/images/enrollment.pdf

Why would they ever take $2,000 less death benefit for something they could buy for $295?

And most people would never pay $295 for it anyway. I can pick up my own phone and call the funeral home for $295

Get back in there and replace that one. They are pulling a smoke and mirror show on her. And then report that agent if he didn't fill out the replacement form (I'm assuming you did.) The replacement form should say "She wanted the insurance company to plan her funeral so was willing to take less coverage" or something to that effect if the agent has any honesty at all.

And who in their right mind would believe that some guy in New Albany, IN could talk his way into a $2,000 better price on the funeral than your own family can? It AIN'T happening. Your own family sitting there with their check book (or $8,000 life insurance policy) has WAY more leverage than some stranger in New Albany, IN.

 

[bill3173]

And then report that agent if he didn't fill out the replacement form (I'm assuming you did.) The replacement form should say "She wanted the insurance company to plan her funeral so was willing to take less coverage" or something to that effect if the agent has any honesty at all.

Yes, if the agent didn't fill out a replacement form, then I would def shake him up a little bit. Not saying "report" it officially,but, a replacement did occur on a wl policy and if the form wasn't filed, I'd talk to LH. If it were term, it wouldn't be worth the effort because no one would care.

I had a bankers life agent replace a $10K WL policy with a term. The lady didn't have a clue what she'd done, but I didn't make a fuss about it. Just not enough money involved, which is a poor excuse, but...

So many agents skip the replacement forms, it's really strange. I do a lot of replacements, and that's not an item to skimp on. You can have your ass handed to you big time.

 

[cladams]

Thanks for all the feedback.

As to the matter of her not wanting the children to handle the money because there is a lack of trust, does the idea of naming a Funeral Home as the primary beneficiary make sense here? She mentioned that this was the appealing aspect of the LH policy with its FCGS affiliation, since the children would not handle the money. Of course I was puzzled about what FCGS provided, and did not think to ask her who she listed as beneficiaries. Obviously if she listed the children as benes, then they will get a check delivered to them regardless of any help from FCGS.

Again, thus far I have advised against listing a Funeral Home as the bene, since it seems that they could utilize all of the funds for their services. Is it possible to "pre-plan" your funeral arrangements if you name the Funeral Home as the beneficiary - similar to "pre-need?" Or is the limitation that of having a "funeral planning guide" on file with them?

 

[Newby]

Thanks for all the feedback.

As to the matter of her not wanting the children to handle the money because there is a lack of trust, does the idea of naming a Funeral Home as the primary beneficiary make sense here? She mentioned that this was the appealing aspect of the LH policy with its FCGS affiliation, since the children would not handle the money. Of course I was puzzled about what FCGS provided, and did not think to ask her who she listed as beneficiaries. Obviously if she listed the children as benes, then they will get a check delivered to them regardless of any help from FCGS.

Again, thus far I have advised against listing a Funeral Home as the bene, since it seems that they could utilize all of the funds for their services. Is it possible to "pre-plan" your funeral arrangements if you name the Funeral Home as the beneficiary - similar to "pre-need?" Or is the limitation that of having a "funeral planning guide" on file with them?

A funeral preneed needs to be funded with a policy that grows to keep up with inflation. You can "preplan" with anything from any life insurance policy to an old car title or a bunch of chickens. It doesn't matter because the funeral home doesn't guarantee anything unless you really prepay into a true funeral insurance plan.

The FCGS doesn't have anything to do with beneficiaries. They are not the beneficiary. They can just call around and price shop the funeral for the beneficiaries.