Agent Churning, or Stupid Client...what Would You Do?

[Birdman300]

I met with a couple the other day who have a preneed contract with a local mortuary. They sent in a direct mail response for a mail campaign I recently did in their area, so I went to see 'em. I reviewed their plan and it was for a fairly small amount...$4,600. They explained to me that they were confused about their plan so I asked them to explain why they were confused. Here's what they told me.
[CLIENT] "We bought a preneed plan in July of '13 from a guy we go to church with. Then that friend moved to a different state a few months later. Then a year later a different guy from the funeral home calls and tells us that our friend "messed up" the paperwork and they would need to rewrite everything. He said he would take care of it. Then a couple of months later (Sept '14) he came to our house and helped us setup a new policy for the same benefit but the premium increase by $25/month. We were 1 year into a 10 pay contract so he put us with a 7 pay contract thereby saving us 2 years on our current plan."
[ME] Did you initiate contact with the funeral home to make changes to your plan such as changing from traditional burial to cremation, or nicer casket, etc.???
[CLIENT] Nope, the agent from the funeral home called us first.
[ME] Ok, so you didn't ask the funeral home to make any changes, they contacted you telling you that they made a clerical error and the only way to correct it was to write brand new policy?...is that correct???
[CLIENT] Yes.
[ME] So he came out to your home and helped you cancel your old contract and rewrite a new one, is that correct?
[CLIENT] Yes.

I call up the carrier on speaker phone and asked about the old policy number...carrier explained that the policy lapsed due to non-payment (which is what I thought they'd say). The client says "that's impossible because we have overdraft protection." I ask carrier if there are any notes explaining anything about why it was cancelled, and they said there are no notes. I asked the carrier if the new policy is current and she said yes. I verified the new policy numbers just to be sure...the old one was cancelled and the new one is current. I ask the client to hand me the new policy so I can look at it...she says she never received it. The carrier responds that it was sent to the agent 2 months ago. Client was upset and she says "Why didn't the agent deliver my policy? I've been paying the premiums" Carrier offered to send a copy of policy to the client, and client accepts. We hang up the phone with the carrier, and the client tells me she doesn't trust that agent/mortuary and wants to know what I can do for her and husband. I spend the next 5 minutes explaining the differences between funeral preneed and regular life insurance and show them how much more benefits I can offer for a lower premium...they said..."we want yours..." I wrote it up.

I don't know what actually happened, but I'm happy with how it turned out. What would you do?

 

[jacobtn]

Stop draft on new one, tell client to throw bills away. I have found the 7 and 10 pays to be easy replacements when found within the first couple yrs. The math doesn't make sense, in most cases they are paying 15k for a 7k funeral. Who cares if the cost is locked in when you are paying double? Since the policy is assigned they can't surrender them for any cash, they usually default to RPU.

 

[jdeasy]

I met with a couple the other day who have a preneed contract with a local mortuary. They sent in a direct mail response for a mail campaign I recently did in their area, so I went to see 'em. I reviewed their plan and it was for a fairly small amount...$4,600. They explained to me that they were confused about their plan so I asked them to explain why they were confused. Here's what they told me.
[CLIENT] "We bought a preneed plan in July of '13 from a guy we go to church with. Then that friend moved to a different state a few months later. Then a year later a different guy from the funeral home calls and tells us that our friend "messed up" the paperwork and they would need to rewrite everything. He said he would take care of it. Then a couple of months later (Sept '14) he came to our house and helped us setup a new policy for the same benefit but the premium increase by $25/month. We were 1 year into a 10 pay contract so he put us with a 7 pay contract thereby saving us 2 years on our current plan."
[ME] Did you initiate contact with the funeral home to make changes to your plan such as changing from traditional burial to cremation, or nicer casket, etc.???
[CLIENT] Nope, the agent from the funeral home called us first.
[ME] Ok, so you didn't ask the funeral home to make any changes, they contacted you telling you that they made a clerical error and the only way to correct it was to write brand new policy?...is that correct???
[CLIENT] Yes.
[ME] So he came out to your home and helped you cancel your old contract and rewrite a new one, is that correct?
[CLIENT] Yes.

I call up the carrier on speaker phone and asked about the old policy number...carrier explained that the policy lapsed due to non-payment (which is what I thought they'd say). The client says "that's impossible because we have overdraft protection." I ask carrier if there are any notes explaining anything about why it was cancelled, and they said there are no notes. I asked the carrier if the new policy is current and she said yes. I verified the new policy numbers just to be sure...the old one was cancelled and the new one is current. I ask the client to hand me the new policy so I can look at it...she says she never received it. The carrier responds that it was sent to the agent 2 months ago. Client was upset and she says "Why didn't the agent deliver my policy? I've been paying the premiums" Carrier offered to send a copy of policy to the client, and client accepts. We hang up the phone with the carrier, and the client tells me she doesn't trust that agent/mortuary and wants to know what I can do for her and husband. I spend the next 5 minutes explaining the differences between funeral preneed and regular life insurance and show them how much more benefits I can offer for a lower premium...they said..."we want yours..." I wrote it up.

I don't know what actually happened, but I'm happy with how it turned out. What would you do?

I've found funeral preneed to be non cancelable. Can be changed to reduced paid up but not cancelled. So it sound as though they were not actually funeral preneed plans.

Also, demand a refund of all premiums paid since they never received their policies. The free look period doesn't start until they have the policies in hand.

As to the title of your thread, it sounds like both.

 

[Rearden]

Excellent advice, and nice job selling the deal.

7/10 Pay Preneed plans are akin to high-interest car financing.

I tell it to prospects like this - "What reason is there to pay DOUBLE for a funeral, when you can reduce your payments significantly today AND keep the same level of coverage with another program?"

 

[Newby]

I met with a couple the other day who have a preneed contract with a local mortuary. They sent in a direct mail response for a mail campaign I recently did in their area, so I went to see 'em. I reviewed their plan and it was for a fairly small amount...$4,600. They explained to me that they were confused about their plan so I asked them to explain why they were confused. Here's what they told me. [CLIENT] "We bought a preneed plan in July of '13 from a guy we go to church with. Then that friend moved to a different state a few months later. Then a year later a different guy from the funeral home calls and tells us that our friend "messed up" the paperwork and they would need to rewrite everything. He said he would take care of it. Then a couple of months later (Sept '14) he came to our house and helped us setup a new policy for the same benefit but the premium increase by $25/month. We were 1 year into a 10 pay contract so he put us with a 7 pay contract thereby saving us 2 years on our current plan." [ME] Did you initiate contact with the funeral home to make changes to your plan such as changing from traditional burial to cremation, or nicer casket, etc.??? [CLIENT] Nope, the agent from the funeral home called us first. [ME] Ok, so you didn't ask the funeral home to make any changes, they contacted you telling you that they made a clerical error and the only way to correct it was to write brand new policy?...is that correct??? [CLIENT] Yes. [ME] So he came out to your home and helped you cancel your old contract and rewrite a new one, is that correct? [CLIENT] Yes. I call up the carrier on speaker phone and asked about the old policy number...carrier explained that the policy lapsed due to non-payment (which is what I thought they'd say). The client says "that's impossible because we have overdraft protection." I ask carrier if there are any notes explaining anything about why it was cancelled, and they said there are no notes. I asked the carrier if the new policy is current and she said yes. I verified the new policy numbers just to be sure...the old one was cancelled and the new one is current. I ask the client to hand me the new policy so I can look at it...she says she never received it. The carrier responds that it was sent to the agent 2 months ago. Client was upset and she says "Why didn't the agent deliver my policy? I've been paying the premiums" Carrier offered to send a copy of policy to the client, and client accepts. We hang up the phone with the carrier, and the client tells me she doesn't trust that agent/mortuary and wants to know what I can do for her and husband. I spend the next 5 minutes explaining the differences between funeral preneed and regular life insurance and show them how much more benefits I can offer for a lower premium...they said..."we want yours..." I wrote it up. I don't know what actually happened, but I'm happy with how it turned out. What would you do?

2nd agent sounds like he was pulling a fast one.

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Stop draft on new one, tell client to throw bills away. I have found the 7 and 10 pays to be easy replacements when found within the first couple yrs. The math doesn't make sense, in most cases they are paying 15k for a 7k funeral. Who cares if the cost is locked in when you are paying double? Since the policy is assigned they can't surrender them for any cash, they usually default to RPU.

The 7 and 10 pays if they pay the full term are definitely bad deals unless they are on children or very young adults. Except if they pay off using the same as cash option. If they had a good agent they will pay 36 months of the 10-pay and pay the balance off as a lump sum. It's a very good deal when they do that.

This person obviously didn't have a good agent.

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I've found funeral preneed to be non cancelable. Can be changed to reduced paid up but not cancelled. So it sound as though they were not actually funeral preneed plans. Also, demand a refund of all premiums paid since they never received their policies. The free look period doesn't start until they have the policies in hand. As to the title of your thread, it sounds like both.

If they are irrevocably assigned to a funeral trust, there can be no refund of any money but they can be canceled.

 

[VolAgent]

If they are irrevocably assigned to a funeral trust, there can be no refund of any money but they can be canceled.

Even in the case of a free look? The policy was never delivered, the client was denied their right to review the policy.

 

[jdeasy]

Even in the case of a free look? The policy was never delivered, the client was denied their right to review the policy.

Free look they can get their money back. Because that's the law. If they could get around that, they would.

 

[VolAgent]

Free look they can get their money back. Because that's the law. If they could get around that, they would.

Thus my question. Newby is saying that they wouldn't get the money back had it been irrevocably assigned to a funeral trust, that the trust would get it.

I doubt this as it would violate the spirit of the law.

 

[jdeasy]

Thus my question. Newby is saying that they wouldn't get the money back had it been irrevocably assigned to a funeral trust, that the trust would get it.

I doubt this as it would violate the spirit of the law.

I'm sure he wasn't talking about a free look period. But that does bring up a question. Since it was assigned then maybe the policy was delivered to the owner?

 

[VolAgent]

I'm sure he wasn't talking about a free look period. But that does bring up a question. Since it was assigned then maybe the policy was delivered to the owner?

The owner is still the owner. The policy benefit has been signed over, not ownership. Every single time I still delivered the policy to the owner.

These people never got their policies and have every right to free look them.