Why Do So Many Agents Want to Sell Final Expense?

[SportsNut]

The range of prem for FE will vary for the 83 yr old... depending on the companies... appx 110 to 124 per mo... for 5K face. Expensive yes, but issuable... yes.quote]

I get for an 83 yr old Female, 5K: 64.14 Male is 86.63 for same.

What company and what u/w requirements...? And just to be clear, those are smoker rates you quoted...?

 

[retread]

The range of prem for FE will vary for the 83 yr old... depending on the companies... appx 110 to 124 per mo... for 5K face. Expensive yes, but issuable... yes.quote]

I get for an 83 yr old Female, 5K: 64.14 Male is 86.63 for same.

At this premium rate, if you put $64.14 in a savings account, it would take about 6 1/2 years to save up $5000. She would be 89 or 90 by that time, if she survived. I can see why this is still a good option. If she died sooner, she has left $5000 for her Final Expenses to her beneficiary. If she lives longer, she should have built up some cash value, which I assume she would gain interest about what a typical bank savings account would pay.... ? What would be the down side to this?

 

[HomeService]

There is very little downside to it except : A. if she builds up too much cash value to where she no longer qualifies for medicaid to pay for her nursing home- if it comes to this. { possibly a valid scenario, somebody brought this up another thread, but I wouldn't worry too much about this scenario, it takes a while to build cash value.} or, B: she does not qualify {healthwise} for this plan and has to buy a graded plan- at which point she does not really have full benefits for two or three years, and most graded plans I have seen, stop at age 80 for the rates, anyhow.

 

[Todd King]

What company and what u/w requirements...? And just to be clear, those are smoker rates you quoted...?

Yes, these are smoker rates. As for the company...UTA. Underwriting is simplified issue. Need a contract?

 

[retread]

There is very little downside to it except : A. if she builds up too much cash value to where she no longer qualifies for medicaid to pay for her nursing home- if it comes to this. { possibly a valid scenario, somebody brought this up another thread, but I wouldn't worry too much about this scenario, it takes a while to build cash value.} or, B: she does not qualify {healthwise} for this plan and has to buy a graded plan- at which point she does not really have full benefits for two or three years, and most graded plans I have seen, stop at age 80 for the rates, anyhow.

It appears you are attempting to reply to my post, however I was asking What is the downside to saving up $5000 by setting aside ~$65/mo instead of buying a FE policy?

My view is that you don't know when you are going to die (unless your agent is Italian). It is for that reason, insurance is best... It covers the near term.... suppose she dies next month or next year... she has $5000 given to the beneficiary who ostensibly will use it for her funeral costs, etc. But what if she lives more than 6 1/2 years... will the continued savings deposits outperform a SIWL FE if she had taken one out?

 

[HomeService]

oh, and another downside to saving money into a savings account= is the taxation of the earnings, even though there's not a lot of high interest earnings out there=right now!! life ins proceeds =tax free... { but really, when we are talking $5000-$10000 death benefit, we are not talking about huge amounts of money, and it's really just intended as a burial plan}

 

[insuranceexec]

oh, and another downside to saving money into a savings account= is the taxation of the earnings, even though there's not a lot of high interest earnings out there=right now!! life ins proceeds =tax free... { but really, when we are talking $5000-$10000 death benefit, we are not talking about huge amounts of money, and it's really just intended as a burial plan}

Life insurance is INCOME tax-free. Life insurance proceeds are not exempt on the Estate tax side; unless you use an ILIT. I know that we are talking about FE policies and for the most part low income people, but LIFE INSURANCE IS NOT ALWAYS EXEMPT FROM THE ESTATE, therefore subject to estate taxes, providing the estate exceeds 3.5 mil.......

 

[retread]

Life insurance is INCOME tax-free. Life insurance proceeds are not exempt on the Estate tax side; unless you use an ILIT. I know that we are talking about FE policies and for the most part low income people, but LIFE INSURANCE IS NOT ALWAYS EXEMPT FROM THE ESTATE, therefore subject to estate taxes, providing the estate exceeds 3.5 mil.......

I don't think there are many FE clients whose estates will exceed "3.5 mil" for crying out loud....

Let's be practical here.... FE policies are low FV. Tax consequences should not pose an issue. I think if the responses to my query only generates these kind of replys, then my position is firm. The older the client, the more it makes sense for them to buy an FE policy. Even the younger (65 - 75) will not be adversely affected by taxes, with or without probate decisions.

I am looking at all issues in FE because I am considering offering them.... just want to make sure I follow my own advice "First, do no harm".

 

[HomeService]

retread, proudly offer them! go out there and write them! oh, and we are not always taliking about "low income folks" who buy FE. Most are retired folks who worked all their lives and have a nest egg saved up... I doubt most have a 3.5 mil estate, but most are not low income, either. I would say that most fall inbetween those two benchmarks- the "low income" and the wealthy. Somewhere inbetween those two- is where we are at- when writing final expense.

 

[insuranceexec]

Remember it is 3.5 mil this year. In 2011 it could go back down to 750K. The comment Homeservice made was not correct, and could have clearly been taken out of context. I was trying to set the record straight. For crying out loud!!!!!!!!!