I wrote an article for Agent Sales Journal in their June magazine titled, “Would you sell that to your mother?” ASJ is an industry magazine and online presence that allows agents to share their opinions.
I’ve had several calls from agents since writing the article, all except one wanting to know more about how I approached the senior life insurance market and how I could do as I claimed and in virtually every case provide the clients with more insurance for the same money or the same insurance for less money. For some of those agents it was an eye opener. Some listened and decided that while I had some good points they still didn’t see how it could work for their clients.
One final expense life insurance agent called today, the exception one, and suggested that I had done irreparable harm to the industry by calling out final expense companies on the way they handle over 50 life insurance. His point was that 40% of older Americans don’t have life insurance and if I turn them off to the idea of overpriced whole life insurance from final expense companies, gosh, how are they ever going to get what they need.
He’s got a point. I certainly can’t personally service all of the business that all the whole life final expense companies squeeze out of the elderly, but I can scream at the top of my lungs that there is a better way to do it and there are more independent agents out there glad to help than there are final expense agents.
He did point out an error in the way I wrote my article so for the sake of correctness, I will revise my comparison so that shows what he claims is an apples for apples comparison. This was the paragraph he took exception to, “Far more people than you would think will qualify for a standard or better rate with a traditional exam and application. Here’s one example: If you are 70 and want $50,000 of life insurance, a final expense policy may cost $183.99 a month. Every five years, or so, the price will increase, so at age 75, you’ll pay $259.49 a month. In contrast, a standard rate (the fourth best rate class) with a traditional exam and application allows you to lock in a guaranteed level rate for life of $167.32. I compared my permanent policy to a final expense company term product. Darn it.
He said that final expense policies are by definition whole life policies. I asked if what he meant was that it had a guaranteed level premium and a guaranteed level death benefit and he agreed to that definition. So, I just went to American National and if they approved me for their maximum final expense whole life policy I would get $25,000 for $221 a month, soooo, is $50,000 of permanent fully guaranteed insurance for $167 a month better than $25,000 of whole life insurance for $221.
And they’ll stutter and say, yah, but yours doesn’t have cash value and I’ll reply that, of course not, that’s why it doesn’t cost so much. And they’ll say cash value is important. But it’s not. Don’t they get it that the company they represent is going to keep that cash value either through surrender charges or through unpaid back loans or by not adding it to the death benefit?
Bottom line. Whether it is final expense life insurance or senior life insurance, it is far better for our industry that agents and customers alike know their are options and they should be explored.