Is Final Expense a Ripoff?

[ccbaxter]

There are other options that can be offered if they have the money to self-insure: funeral trusts, spwl, etc.

Even if someone has the money to self-insure, there's virtually always the timely access problem. Unless the decedent has the cash in a mason jar under the bed or has handed it off to a trusted person, next-of-kin can have problems accessing the money. It's not like you walk into the bank and say, "Hey, I need the money in Grandpa's CD for his funeral," and they say, "Sure, here you go! Sorry to hear about your Grandpa."

Dealing with the petty bureaucracy involved with the death or disability of a loved one is part of the road to sainthood.

 

[Josh]

Do you think you are selling the customers a good deal or would they be better off saving the small face amounts themselves and self insuring?

Great question.

If they were going to save up $10k to bury themselves, do you think they would have done it by now? That's the rub. Yes, a small face amount of whole life insurance purchased when you're at the end of your life is an expensive way to deal with it, but it's hardly a ripoff.

Most people make really bad financial decisions. Like really bad. People don't have enough money to cover the cost of their healthcare in retirement, let alone other expenses.

Is FE making the best of a bad financial situation? Maybe. The fact of the matter is if people are this bad with their money, odds are they have kids that are equally bad with their money. If the kids have to foot the bill for a $10k funeral because their parents didn't have the forethought, wisdom, and/or discipline to take care of it, then that financial burden gets added to the list.

FE does solve a real problem for an affordable price, so it certainly has it's place.

 

[Newby]

Exactly! She knows she wasted 16 years of premiums right?

But she had 17-years worth of lovin. So she came out a little bit ahead.

 

[bboman23]

But she had 17-years worth of lovin. So she came out a little bit ahead.

Exactly! A LITTLE BIT! HAHAHA....

You know I'm just joking. And only bringing the wife up as a joke. Don't want anyone I'd pull the crap stupid agents try to pull on JD.

 

[nylife11023]

For those in the FE demographic an $899 cremation plan is a better financial alternative to thousands of dollars spent on an overpriced life insurance policy.

 

[xrac]

For those in the FE demographic an $899 cremation plan is a better financial alternative to thousands of dollars spent on an overpriced life insurance policy.

Some people do not want cremation.

 

[nylife11023]

Some people do not want cremation.

Some people don't want an old, beat up, used truck. But that is their only viable option. It is almost the same with burial. It makes little rational sense to pay thousands of dollars for a fancy funeral when the money saved by buying a cheap cremation plan could be put to better use... like maybe a not-so-beat-up truck?

OK, so these are not people who think rationally. I understand and won't argue.

That said, I wager that if you offered your average FE prospect the choice of a $899 one-time cremation plan (payable in monthly installments for a fixed period) vs. a $50 a month pay-for-life FE policy, that more often than not, the cremation plan would be bought.... especially when you can tell them about the nicer truck they can afford... or maybe the (used) bass fishing boat they always wanted... or whatever will give them years of pleasure in this life, as opposed to an expensive one-day send-off to the next.

Of course the comp for FE is greater than that for the cremation plan, so this demographic never really gets the choice.

In answer to the question the thread title asks, I say yes... but I hardly expect anyone here to agree!!

 

[bboman23]

Some people don't want an old, beat up, used truck. But that is their only viable option. It is almost the same with burial. It makes little rational sense to pay thousands of dollars for a fancy funeral when the money saved by buying a cheap cremation plan could be put to better use... like maybe a not-so-beat-up truck?

OK, so these are not people who think rationally. I understand and won't argue.

That said, I wager that if you offered your average FE prospect the choice of a $899 one-time cremation plan (payable in monthly installments for a fixed period) vs. a $50 a month pay-for-life FE policy, that more often than not, the cremation plan would be bought.... especially when you can tell them about the nicer truck they can afford... or maybe the (used) bass fishing boat they always wanted... or whatever will give them years of pleasure in this life, as opposed to an expensive one-day send-off to the next.

Of course the comp for FE is greater than that for the cremation plan, so this demographic never really gets the choice.

In answer to the question the thread title asks, I say yes... but I hardly expect anyone here to agree!!

You had me at bass fishing boat!

 

[Josh]

For those in the FE demographic an $899 cremation plan is a better financial alternative to thousands of dollars spent on an overpriced life insurance policy.

It's a pretty competitive market for the carriers. As far as simplified issue whole life policies go they're not bad, but paying for SIWL when you're within 10 years of your expiration isn't exactly going to be cheap.

 

[rousemark]

Great question.

If they were going to save up $10k to bury themselves, do you think they would have done it by now? That's the rub. Yes, a small face amount of whole life insurance purchased when you're at the end of your life is an expensive way to deal with it, but it's hardly a ripoff.

Most people make really bad financial decisions. Like really bad. People don't have enough money to cover the cost of their healthcare in retirement, let alone other expenses.

Is FE making the best of a bad financial situation? Maybe. The fact of the matter is if people are this bad with their money, odds are they have kids that are equally bad with their money. If the kids have to foot the bill for a $10k funeral because their parents didn't have the forethought, wisdom, and/or discipline to take care of it, then that financial burden gets added to the list.

FE does solve a real problem for an affordable price, so it certainly has it's place.

How is buying a small policy at the end of your life an expensive way to deal with it? A 30 year old buys 10K for $144 per year, dies at 75. He has paid $5040. If he wants until he is 70 and buys. $10k for around $800 per year, he have paid only 4K at his death. The trick knowing when you are going to die.