Selling final expense in a growing market

In 1999, the youngest baby boomer was 35 years old, and the oldest was 53. Starting in January 2011, more than 10,000 individuals a day will be turning 65 years of age. During the next 20 years, this mass of people will need a whole range of financial protection products. The four primary concerns for these 76 million baby boomers will be:

Doctors expense
Hospital expense
Prescription
Recovering at home after a procedure or not leaving a financial burden to their family/leaving a legacy. (This is where final expense insurance comes in.)

There are two financial hazards for seniors;

Final expense gap
Reduced income

Where will they get money for final expense?

Borrow
Cash
Family
Insurance for final expense

Pre-Funeral Home Expenses

Ambulance
Paramedical fees
Hospital emergency room charges
Physicians' fees
And other expenses

To pay for these predictable expenses doesn't it make sense to use discounted dollars?

An estimate of final expenses today is between $6,000 and $15,000.

The cost of a regular adult funeral includes the following basic items, which does not include cemetery, monument/marker costs or miscellaneous cash advance charges such as for flowers or obituaries:

Item	Price*
Non-declinable basic services fee	$1,817
Removal/transfer of remains to funeral home	$250
Embalming	$628
Other preparation of the body	$200
Use of facilities/staff for viewing	$395
Use of facilities/staff for funeral ceremony	$450
Use of a hearse	$275
Use of a service car/van	$125
Basic memorial printed package	$125
Subtotal without Casket:	$4,265
Metal Casket	$2,295
AVERAGE COST OF A FUNERAL	$6,560
Vault	$1,195
Total Cost of a Funeral with Vault	$7,755

And funeral prices just keep rising.

Year	Cost of an Adult Funeral
1960	$708
1965	$790
1971	$983
1975	$1285
1980	$1809
1985	$2737
1991	$3742
1995	$4626
2000	$5180
2006	$6195

Source: 2010 NFDA General Price List Survey. (Note: This survey is not conducted annually; 2009 is the most recent year for which NFDA has data.)

After funeral expenses

Probate & miscellaneous estate costs
Expenses
Unpaid debts

So how do you address this need in such a growing market? It's not so much a sales script as asking questions and getting them to think.

1. Have you ever been responsible for making funeral/cemetery/cremation arrangements when someone died? How did it go for you? Did it create any financial problems?

2. Who will be responsible for your arrangements upon your death? Is that person financially prepared for such an emergency?

3. Do you have any children/grandchildren/a favorite charity that you would like to leave money to upon your death?

4. Upon your death, does your spouse have enough savings to protect against the immediate loss of your income?

5. How much do you expect your funeral expenses to cost if you died today? How much do you think the same arrangements would cost if you lived to age 80 or 90? (Use an inflation calculator to figure this out. If someone is 65 today and would have an $8,500 funeral at today's price, that projects to $18,624 if they live to age 85 and $27,568 if they live to age 95, figuring 4 percent annual inflation.)

6. Do you realize your bank accounts and assets are not available to your children immediately upon your death? (Unless you have a joint account, which opens up a whole other set of problems.)

7. Are you aware there are final expense insurance policies that can be paid with one single annual premium and with an affordable monthly premium?

8. Do you have any health conditions that have caused you to be turned down for insurance coverage?

9. Who would be the beneficiary of your insurance policy?

10. If you don't take out a final expense policy, what alternative plan will you use for your family?

Selling final expense is just more conversational than a formal presentation. They will usually tell you why they want it. You just have to get the conversation started and guide them to the correct policy that suits their needs and is competitively priced for their age and health.

Reduced income due to a death

The problem: Reduced income can be financially devastating to a surviving spouse, often leaving them dependent upon other family members or government programs for help.

The need: Supplemental income to replace lost earnings.

The solution: A plan that will provide a source of income to the surviving spouse to sustain a normal lifestyle.

What are your clients' choices?

Rely on family and friends
Spend down personal assets and savings
Borrow
Transfer the risk to a final expense program

Final expense program

An affordable solution providing security will help to assure your client won't be a burden to their loved ones:

Benefits do not decrease
Premiums do not increase
Policy cannot be canceled because of your age or health
Protection from the very first day your policy takes effect
No medical exam
Benefits are paid tax free
Simple application process

A final expense program can be left to:

A spouse
Children
A church
A favorite charity

It can be used to:

Pay final expenses
Provide income to a surviving spouse
Leave behind for special needs

There are many decisions loved ones must make immediately following a loss. Putting together a final expense program with a licensed professional so their loved ones won't have to worry about financial pitfalls that accompany these important decisions will help ease their mind and their potential burden.

For more from Lloyd Lofton, see:

Long-term care as a component of financial planning

Have your cake… and eat it, too

6 health insurance basics your clients should know