chaos
Expert
The Final Expense Market: Overview and Demographics
According to LIMRA, life insurance sales have been declining recently in most categories other than a few. One of those segments holding its' own and increasing is the Final Expense market of Whole Life Insurance. But before you walk into the home of your first potential customer, there are a few things you need to know. FE sales are not rocket science but there are several things you should know about your customer and their tendencies to be able to close. Let's go over some of the characteristics of the market segment and then we'll touch on the actual appointment and sales process in later installments.
Market Segment Demographics:
Age Segment: The FE market is comprised of seniors aged 50 to 75 approximately.
Income Levels: They are in general lower income individuals. Typically you see a couple relying on just their social security checks for income. Some may also have a small retirement income from their previous employer but in general their income tends to be 25K or below of a couple and even lower for single, divorced, or widowed individuals.
Time and Place of Appointments: Senior FE sales allow for normal business hours. Most of the FE market is either retired or disabled. They are home during the day. That means you can run your appointments during the day and have your evenings and weekends with your family or to yourself. Most all of your appointments will be done at the residence of the prospect.
Desire for Safety: The FE market is also distinguished by the general desire of the senior to purchase insurance with guarantees. The Whole Life product seems to match their needs versus other insurance products. With most preferred issue whole life cases the following guarantees are in place. Rate – Their premiums remain level and will not increase. Lifetime Benefit – As long as premiums are paid and there are no loans or accelerations. Coverage cannot be cancelled due to age or health. Full death benefit is payable day one of coverage (preferred policies only).
The Need: Their need for final expense is defined by a couple factors in general. One, they do not want to be a burden to children or loved ones. They do not want them stuck with a funeral home bill they may not be able to pay on top of the grief they will be experiencing. That is not to say the children couldn't afford to pay the final expenses of a parent but, more so the desire of the parent to not be a burden. This is important for a number of reasons, not the least being an opportunity for you to build emotion about the sale which we will cover later. The second factor of need is the fact that most of the FE market cannot simply write a check to cover FE obligations. When you run into this combination of factors, you are in position to help the customer address both concerns and make a real impact on their lives and your income.
Every appointment will be different. Some may have enough in cash to cover FE obligations but their concern for having insurance in place and not being a burden may override the fact that they have it covered. Some may simply not care of the burden they leave to others. On some occasions you will find both a need and desire for coverage but they simply cannot afford it. In other situations you will find both a need and the funds to cover the expense but they may have health conditions that make them uninsurable or only eligible for a GI (Guaranteed Issue) policy. It's always a puzzle you have to put together to determine if you are able to help.
To Summarize: FE sales are made to the lower income senior market. Most of the market does not have adequate funds at disposal to cover funeral costs. They do not wish their death to cause a financial burden and seek policies that provide protection with guarantees. Whole life insurance policies seem to meet their needs best.
Look for additional installments of this very basic tutorial for agents new to the business or experienced agents wanting to expand into the FE market. I will cover topics of "How to Manage the FE Market", The FE replacement Sale, The FE Appointment Process and hopefully others as time permits.
According to LIMRA, life insurance sales have been declining recently in most categories other than a few. One of those segments holding its' own and increasing is the Final Expense market of Whole Life Insurance. But before you walk into the home of your first potential customer, there are a few things you need to know. FE sales are not rocket science but there are several things you should know about your customer and their tendencies to be able to close. Let's go over some of the characteristics of the market segment and then we'll touch on the actual appointment and sales process in later installments.
Market Segment Demographics:
Age Segment: The FE market is comprised of seniors aged 50 to 75 approximately.
Income Levels: They are in general lower income individuals. Typically you see a couple relying on just their social security checks for income. Some may also have a small retirement income from their previous employer but in general their income tends to be 25K or below of a couple and even lower for single, divorced, or widowed individuals.
Time and Place of Appointments: Senior FE sales allow for normal business hours. Most of the FE market is either retired or disabled. They are home during the day. That means you can run your appointments during the day and have your evenings and weekends with your family or to yourself. Most all of your appointments will be done at the residence of the prospect.
Desire for Safety: The FE market is also distinguished by the general desire of the senior to purchase insurance with guarantees. The Whole Life product seems to match their needs versus other insurance products. With most preferred issue whole life cases the following guarantees are in place. Rate – Their premiums remain level and will not increase. Lifetime Benefit – As long as premiums are paid and there are no loans or accelerations. Coverage cannot be cancelled due to age or health. Full death benefit is payable day one of coverage (preferred policies only).
The Need: Their need for final expense is defined by a couple factors in general. One, they do not want to be a burden to children or loved ones. They do not want them stuck with a funeral home bill they may not be able to pay on top of the grief they will be experiencing. That is not to say the children couldn't afford to pay the final expenses of a parent but, more so the desire of the parent to not be a burden. This is important for a number of reasons, not the least being an opportunity for you to build emotion about the sale which we will cover later. The second factor of need is the fact that most of the FE market cannot simply write a check to cover FE obligations. When you run into this combination of factors, you are in position to help the customer address both concerns and make a real impact on their lives and your income.
Every appointment will be different. Some may have enough in cash to cover FE obligations but their concern for having insurance in place and not being a burden may override the fact that they have it covered. Some may simply not care of the burden they leave to others. On some occasions you will find both a need and desire for coverage but they simply cannot afford it. In other situations you will find both a need and the funds to cover the expense but they may have health conditions that make them uninsurable or only eligible for a GI (Guaranteed Issue) policy. It's always a puzzle you have to put together to determine if you are able to help.
To Summarize: FE sales are made to the lower income senior market. Most of the market does not have adequate funds at disposal to cover funeral costs. They do not wish their death to cause a financial burden and seek policies that provide protection with guarantees. Whole life insurance policies seem to meet their needs best.
Look for additional installments of this very basic tutorial for agents new to the business or experienced agents wanting to expand into the FE market. I will cover topics of "How to Manage the FE Market", The FE replacement Sale, The FE Appointment Process and hopefully others as time permits.
One, worked, one retired, one on disability. The thing they had in common with what you describe is " They are world class procrastinators". There may be only one FE market but it certainly has different segments and you don't have to work the very low end of it to make a living.
(can't remember her name but think she is in Chicago)
