Final expense


I ran across a contact yesterday that was screwed by another agent(maybe?). Here is what happened.

The woman is 84 years old and had two small 3K$ fe policies with two different companies. An agent went to her and talked her into getting the cash out of these two policies and then rewriting them into one new policy of 6k $ for almost $95 per month. Before rewriting the policies she was paying less than $60 per month total. She thought she was going to receive a total of $1600 to $2000 cash out value on the two older policies.

For some reason this just doesn't seem right to me. Any comments?
Did she need quick cash for some reason?

If not, I don't understand her decision.
There are two companies that I know of that will buy very small policies (25k and up) from clients. They have a fast turn around time also. While it wouldnt be an option for this client, it might be for another.
Unless she was in desperate need of money she got screwed!!

Unless the above is true she should report the agent.

Again this is based on the very limited info. provided.
I would have to agree with MIBiz, obviously the agent who guided the woman into this decision was looking out for someone's best interests...but it sure wasn't the clients. They should report the agent.
Hey everybody… I am going to play “Devils Advocate” here just for fun. Now we don’t know the exact numbers for this case but lets just use general numbers… Lets say this lady for example has 6K of face value F.E. coverage with 2K in cash values with a $60 dollar month premium. In reality she is paying $60 for $4,000 in coverage, because she already has 2K that is her Money. So including policy fee she is paying around $15 per thousand per month….

So if she would replace her policy at lets say $85 for 6,000 in coverage, that is around $14 dollars per $1000 (including Policy fee) and also getting back $2000 in Cash Values.

Maybe she realized that $6000 was not going to be enough for her final expenses. Maybe she wanted to increase her coverage, and if she was able to pay a lower price per $1000 then here previous policies and she need more coverage this would have been a viable solution….

Just thought I would argue the other point of view… Hope all you folks have a good weekend and Root for the COLTS on Sunday!!!!!
Assuming she received $1,600 from the existing policies and pays $35 a month more, it would take 46 months for her to have been "screwed." ($35/mo X 46 months = $1,610).

Unless she now has a graded policy, she might not have received as bad a deal as you might think.

I'm not defending this and I would not do it myself unless she really needed the cash. Just want to agree with Hoosier in that maybe this was not as bad as it seems.

By the way, Colts will go down and go down hard.

There are two companies that I know of that will buy very small policies (25k and up) from clients. They have a fast turn around time also. While it wouldnt be an option for this client, it might be for another.

Hey I ran across one recently that I wonder if you could have helped with.

I do funeral preplans. A lady called me very upset. She had preplanned with the funeral home several years earlier. Funeral was $9,000 when she started it. She paid a total of $9,075 over 3-years.

Now she has moved to another town and has decided to just have a direct cremation. She recently divorced her husband, has no kids, and has a serious cancer condition where she doesn't believe she will live over 2-years.

The current death benefit on her pre-plan policy is around $14,000 and compounds at 3% annually. She wants all that money now (unreasonable request) and checked on cashing it out but the cash value is only around $7,000.

She is mad at the world and angry that she can only get $7,000 now to spend while she is living.

I gave her two options:
1. Take a loan for the $7,000 to spend as she pleases and pay the interest on it to keep the remainder in force. Assign the remainder to the funeral home in her new town that will perform the cremation service and the balance to any charity or friends. (since she has no family.)

2. I told her (if it was legal to do so) I would give her the $9,075 she paid plus $1,000 more for full ownership of the policy. I figured a $5,000 bonus plus 3% compounding on a terminally ill person would be a good investment. (Note: I was not the selling agent) She liked this option because no one else would give her this much. But when I ased the insurance company if this was legal to do they said "Absolutely not!

I didn't persue it any further.

Could your company have done something legal for her?