I've been reading that overall nationwide life insurance sales are down this year. But there are niche market life products that have shown growth during this recession.
There is a lucrative opportunity for selling low face amount policies in what is known as the final expense marketplace. These policies are predominately sold to cover the costs associated with a funeral. Policy face amounts for these final expense insurance carriers basically range from $5,000 to $30,000, with issue ages that may range from 50 to 85 years of age. These are usually simplified issue policies with point-of-sale approval or decline, using only a medical questionnaire without an APS or any other type of follow-up required.
These clients are typically retired senior citizens who are realistic enough to admit to themselves that the inevitable is getting closer each day -- death. For the most part, they are no longer procrastinating or in denial -- they may just need assistance in making an educated purchasing decision.
Consider this market during our current recessionary times. When given the options of either paying for their funeral by pulling money from their widow's or widower's savings, charging the cost of a funeral to a credit card, or by paying monthly premiums now on a life insurance discounted, income tax-free, lay-away plan, you can see that a final expense insurance policy becomes an optimal choice.
Once the senior client is convinced of the blunt reality that mortality has a 100% likelihood of occurrence, a call to action should be created by inquiring what plans that they actually have in place to do something about it. This is not just-in-case insurance as with auto or fire coverage -- death happens.
Creating an awareness of what costs may actually be needed to cover final expenses should also be shared with these clients. There's the viewing or wake, formal service in a funeral home or church, rental of a hearse, purchase of a casket, vault or cemetery plot, headstone, flowers, burial or cremation expenses, embalming, cosmetics, costs which may include transporting their body and possibly paying travel costs for the deceased's relatives and friends to attend their funeral.
In addition, there is the often-overlooked loss of monthly Social Security income and pension income that will also end with their life. I like to use a compliance-approved worksheet that helps clients discover how much they will approximately be losing in Social Security and pension income upon the first spouse's death. This manual numeric exercise helps to enforce the actual need. Final expense life insurance's amplified, income tax-free death benefit, occurs at the exact time that it is needed most. This is what's meant by life insurance being the miracle of paper and ink.
The final expense market will only become more prevalent as seniors become a larger market demographic and also as many Americans' personal savings stop growing or begin to dwindle down.
Michael Frahm is the director of marketing for the home office of Oxford Life Insurance Company, a final expense life insurance carrier located in Phoenix. He had previously been a Million Dollar Round Table producer, instructor for the Life Underwriters Training Council, and has over 20 years of life insurance experience. Mike can be contacted directly at mikefrahm@oxfordlife.com or by phone at (800)308-2318.
