Is this a Rip Off?

[TonyC]

I know nothing about Final expense but my favorite Aunt asked me if she was paying too much for her policy.

She pays $1575 per yr....for a Term Life Policy that will pay 15k at her death. She is 77 yrs old...and relatively good health.

Sounds like a lot of money....for little benefit.

Is this too much money?

Thanks in advance...

 

[Newby]

I know nothing about Final expense but my favorite Aunt asked me if she was paying too much for her policy.

She pays $1575 per yr....for a Term Life Policy that will pay 15k at her death. She is 77 yrs old...and relatively good health.

Sounds like a lot of money....for little benefit.

Is this too much money?

Thanks in advance...

You have conflicting information. FInal Expense insurance is never term it is always whole-life.

Where you may be confused, she may be on a limited payment policy meaning she pays for 5 or 10 years but is covered for the rest of her life. That information is necessary to know if she has a good deal or not.

If her policy is lifetime payment and she is healthy, she can get a better deal.
77 year old female healthy non-smoker $15,000 coverage

Forethought Forelife $1,434
Monumental $1,421
Oxford $1,191

The only term life insurance that people commonly mistake for final expense is the AARP term. If that's what she has she will lose her coverage and the money she has paid in if she lives 1-day past age 80.

If she has a limited payment policy (5-year or 10-year payment) she probably can't beat the rate she already has.

She may also have a funeral preplan policy which is not only a limited payment but the death benefit increases each year. If that's what she has, she has a good rate for sure.

 

[xrac]

You have conflicting information. FInal Expense insurance is never term it is always whole-life.

Where you may be confused, she may be on a limited payment policy meaning she pays for 5 or 10 years but is covered for the rest of her life. That information is necessary to know if she has a good deal or not.

If her policy is lifetime payment and she is healthy, she can get a better deal.
77 year old female healthy non-smoker $15,000 coverage

Forethought Forelife $1,434
Monumental $1,421
Oxford $1,191

The only term life insurance that people commonly mistake for final expense is the AARP term. If that's what she has she will lose her coverage and the money she has paid in if she lives 1-day past age 80.

If she has a limited payment policy (5-year or 10-year payment) she probably can't beat the rate she already has.

She may also have a funeral preplan policy which is not only a limited payment but the death benefit increases each year. If that's what she has, she has a good rate for sure.

Newby,

Did you catch this news: Texas Signs Liquidation Order For Funeral Insurer?

National Underwriter Life & Health

 

[Newby]

Newby,

Did you catch this news: Texas Signs Liquidation Order For Funeral Insurer?

National Underwriter Life & Health

I'm well aware of that story. That has to do with a 3rd party marketer to funeral homes, NPS (National Prearranged Services) which was a complete scam.

A few years ago I kept hearing about this company which had a very unique marketing angle (completely red-hot young female reps in short black skirts.) When you figure in that the average funeral home owner is a middle-aged man this may have been effective although very unprofessional.

I also heard they were also offering UNBEIEVABLE terms to the funeral homes in the way of UNLIMITED product growth guarantees.

I had them send a rep in to speak with me.

Here's a short version of how that meeting went.
Me: How much does your insurance death benefit grow each year?
Hottie rep: We don't have a set amount. However much the funeral home raises their prices, we just cover it all.
Me: So if we have 10% price increases every year you guys increase the contracts 10% with no additional premium?
Hottie rep: Yes! Isn't that great!
Me: So if I write a $10,000 policy today and I need that policy to cover $41,772 15 years later when the person dies, you guys will pay me that full amount? (All the legit preneed insurance companies have between 3.5 to 4.5% annual growth.)
Me: OK, What insurance company do you use to write your preneed contracts?
Hottie rep: We don't like to give out their name.
Me: What!???! How can I check out their history and AM Best rating?
Hottie rep: Oh, we don't let them be rated by AM Best or any of those rating services. We don't believe in them.
Me: OK, I think we're done.

I talked to several funeral home owners over the years that were writing some or all of their business through NPS and when I asked about these types of things all they could answer was "I REALLY like the rep."

Any funeral home that has done any business with this company was completely stupid and should lose thier business license over it. I would have sympathy if they were suckered into a clever scam but this wasn't even well hidden.

The consumers will of course be protected for what they paid in.

Can you tell I really like talking about this? It's my 2nd favorite subject after the AARP term life insurance.

 

[TonyC]

Thanks New,

So what you are saying is that whole life policies are used for final expense.....Hmmmm

That seems like overkill. Typically Whole life (from what i remember in class) has cash value. This policy does not (but i will double check that). And....i don't remember seeing a whole life policy that has a face value of 15k.

I will get back to you on this one...

thanks again.

TW

You have conflicting information. FInal Expense insurance is never term it is always whole-life.

Where you may be confused, she may be on a limited payment policy meaning she pays for 5 or 10 years but is covered for the rest of her life. That information is necessary to know if she has a good deal or not.

If her policy is lifetime payment and she is healthy, she can get a better deal.
77 year old female healthy non-smoker $15,000 coverage

Forethought Forelife $1,434
Monumental $1,421
Oxford $1,191

The only term life insurance that people commonly mistake for final expense is the AARP term. If that's what she has she will lose her coverage and the money she has paid in if she lives 1-day past age 80.

If she has a limited payment policy (5-year or 10-year payment) she probably can't beat the rate she already has.

She may also have a funeral preplan policy which is not only a limited payment but the death benefit increases each year. If that's what she has, she has a good rate for sure.

 

[Newby]

Thanks New,

So what you are saying is that whole life policies are used for final expense.....Hmmmm

That seems like overkill. Typically Whole life (from what i remember in class) has cash value. This policy does not (but i will double check that). And....i don't remember seeing a whole life policy that has a face value of 15k.

I will get back to you on this one...

thanks again.

TW

Yes, Final Expense is ALWAYS whole-life. Final expense is for money needed at death. Term life insurance is not designed to be in force at death (unless someone dies unusually young.) The cash value is what keeps the policy in force their whole life. The lack of cash value (with term) is what forces them to pay higher and higher premiums as they get older and eventually end the policy in most cases.

Final Expense policies are commonly sold in amounts from $3,000 to $30,000.

I would definitely expect your favorite aunt's policy to be some form of whole-life. It will tell on the front of the policy. You will also want to see if it is a participating policy (pays dividends) or a non-participating.

 

[TonyC]

Ok...i talked with the insurance company and here's the deal.

Its with Prudential Insurance Group and its called permanent life. It goes up every year...so it is a form of Term Life. There is no cash value...but if you choose...you can elect to pay additional money into the plan and get some cash value (probably crap return).

This is sounding more and more like a crappy deal.

What do you think?

 

[xrac]

I'm well aware of that story. That has to do with a 3rd party marketer to funeral homes, NPS (National Prearranged Services) which was a complete scam.

A few years ago I kept hearing about this company which had a very unique marketing angle (completely red-hot young female reps in short black skirts.) When you figure in that the average funeral home owner is a middle-aged man this may have been effective although very unprofessional.

I also heard they were also offering UNBEIEVABLE terms to the funeral homes in the way of UNLIMITED product growth guarantees.

I had them send a rep in to speak with me.

Here's a short version of how that meeting went.
Me: How much does your insurance death benefit grow each year?
Hottie rep: We don't have a set amount. However much the funeral home raises their prices, we just cover it all.
Me: So if we have 10% price increases every year you guys increase the contracts 10% with no additional premium?
Hottie rep: Yes! Isn't that great!
Me: So if I write a $10,000 policy today and I need that policy to cover $41,772 15 years later when the person dies, you guys will pay me that full amount? (All the legit preneed insurance companies have between 3.5 to 4.5% annual growth.)
Me: OK, What insurance company do you use to write your preneed contracts?
Hottie rep: We don't like to give out their name.
Me: What!???! How can I check out their history and AM Best rating?
Hottie rep: Oh, we don't let them be rated by AM Best or any of those rating services. We don't believe in them.
Me: OK, I think we're done.

I talked to several funeral home owners over the years that were writing some or all of their business through NPS and when I asked about these types of things all they could answer was "I REALLY like the rep."

Any funeral home that has done any business with this company was completely stupid and should lose thier business license over it. I would have sympathy if they were suckered into a clever scam but this wasn't even well hidden.

The consumers will of course be protected for what they paid in.

Can you tell I really like talking about this? It's my 2nd favorite subject after the AARP term life insurance.

Newby,

I knew you would know the scoop. Isn't it amazing how a short skirt can cause some men to throw reason out the window!
- - - - - - - - - - - - - - - - - -

Ok...i talked with the insurance company and here's the deal.

Its with Prudential Insurance Group and its called permanent life. It goes up every year...so it is a form of Term Life. There is no cash value...but if you choose...you can elect to pay additional money into the plan and get some cash value (probably crap return).

This is sounding more and more like a crappy deal.

What do you think?

Sounds like a UL policy on which she is making a minimum premium payment.

 

[Newby]

Ok...i talked with the insurance company and here's the deal.

Its with Prudential Insurance Group and its called permanent life. It goes up every year...so it is a form of Term Life. There is no cash value...but if you choose...you can elect to pay additional money into the plan and get some cash value (probably crap return).

This is sounding more and more like a crappy deal.

What do you think?

Tony,
If she's healthy and can get immeadiete coverage, it's a no brainer...sign her up with Oxford or one of the final expense companies with a good rate.

If she can't qualify for immediete coverage, I would call Prudential back and ask for a schedual of how much her premium will be each year for her to keep the policy from lapsing. I don't think you will like the answer because I also think it is one of the famous Prudential UL policies of days gone by. If she has a clear record that they cashed out a whole-life policy when they sold her that one, you may have a chance of fighting them to get the old policy back. There were class-action suits against Prudential years ago about that.

BUT, if it's definitely UL and the premium is already that high and increases each year, I would go with even a 2-yr graded policy from a different company if the rate is lower and her health is pretty stable.

You used to run into those Prudential policies all the time but most of them have been canceled or have self destructed by now. I guess a lot of them were settled in lawsuits. Those were the dark-days of Prudential which had been a really great company before that.

 

[TonyC]

New!

Thanks very much!

I don't know very much about LI, but this sounds like a bad deal. Basically, she's looking for some burial insurance that will take care of her final expenses. She probably will stick around for another 10 yrs...but i think her money would be better spent in other areas.

Probably do better in a money market or CD.

Anyone know of a Final Expense plan with a face value of 5k?

Tony,
If she's healthy and can get immeadiete coverage, it's a no brainer...sign her up with Oxford or one of the final expense companies with a good rate.

If she can't qualify for immediete coverage, I would call Prudential back and ask for a schedual of how much her premium will be each year for her to keep the policy from lapsing. I don't think you will like the answer because I also think it is one of the famous Prudential UL policies of days gone by. If she has a clear record that they cashed out a whole-life policy when they sold her that one, you may have a chance of fighting them to get the old policy back. There were class-action suits against Prudential years ago about that.

BUT, if it's definitely UL and the premium is already that high and increases each year, I would go with even a 2-yr graded policy from a different company if the rate is lower and her health is pretty stable.

You used to run into those Prudential policies all the time but most of them have been canceled or have self destructed by now. I guess a lot of them were settled in lawsuits. Those were the dark-days of Prudential which had been a really great company before that.