The Final Expense Market: Overview and Demographics
According to LIMRA, life insurance sales have been declining recently in most categories. HOWEVER, one of those few 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 more application effectively. Here are some characteristics of the
General Market Segment Demographics
Age Segment: The FE market is usually comprised of seniors between the ages of 50 to 80.
Income Levels: They are generally in lower socio-economic areas, but not always because everyone needs a final expense plan. 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 below $35,000 as a couple, and even lower for single, divorced, or widowed individuals.
Time and Place of Appointments: Senior FE sales allow for normal daytime 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 proposed insured.
Desire for Security: 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.
Fixed Rates – Will their premiums remain level and not increase? YES.
Lifetime Benefits – If premiums are paid and there are no loans or accelerations, will coverage remain in force and not cancel due to age or health? YES.
Immediate Death Benefits – Are there full death benefits payable day one of coverage? YES. (Typically on preferred and standard policies only.)
The Need: Their need for final expense is generally defined by two main factors.
The First, and the absolute Most important, they do not want to be a burden to children or loved ones.
They do not want them stuck with a funeral home bill and have to make payments 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.
The Second, and also important, is the fact that most of the FE market cannot simply write a check to cover FE obligations.
Now you can stop analyzing and know your presentation begins with the opportunity for you to build emotion about the reality of the conversations their loved ones will have.
“Oh my goodness, what did mom want?”
“Thank goodness, mom had it taken care of.”
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 a puzzle. Who else but You can put it together and determine how best to help them.
Summarizing: 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.
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