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Before you can sell Final Expense effectively, you need to understand what the product actually is, who it is designed for, and how carriers decide which plan a client qualifies for. Final Expense is simple on the surface: smaller whole life policies designed to help families cover burial costs and other end-of-life expenses. But the sale depends on understanding the differences between policy types, underwriting outcomes, health questions, waiting periods, and how to guide a client toward the best option available. This section gives you the foundation. Once you understand these basics, quoting makes more sense, carrier strategy becomes clearer, and you’ll be better prepared to explain coverage with confidence on a live call.
Level Death Benefit
The word level is used to indicate that the policy payout is the same for all years. These plans will pay 100% of the selected death benefit whenever death occurs, even in the first two policy years. Some carriers offer two different types of level polices based on health risks. They may refer to one as “preferred” and another as “standard”. The preferred plan requires that all medical questions on the application be answered "no". Since a preferred plan requires better health it offers the carrier's best premiums. A “standard” level plan will also pay 100% of the policy face amount whenever death occurs, but will accept "yes" answers to certain medical conditions, such as COPD (chronic obstructive pulmonary disease). FLIG terminology for these plans is “Level” and “Level 2nd Tier”. This terminology gives us a consistent way to refer to two plans that have varying names among carriers, that are both level plans. One carrier may use the terms “preferred” and “standard” to refer to two different level plans, while another uses “premium” and “deluxe”.
Types of Final Expense Policies
Because they are whole life policies, final expense policies are designed to last ones entire lifetime at fixed premiums that will not change. The premiums can be paid over a lifetime or in shorter timeframes like 10 or 20 years. They also build cash value that can be withdrawn in times of need. The withdrawal is in the form of a policy loan. Fees and finance charges are part of this loan. If this loan isn’t paid back at the time of death, the remaining loan balance will be subtracted from the death benefit paid to the beneficiary(s).
The demographic of the final expense market is seniors, or near seniors, between the ages of 50 and 85, that are looking for smaller face amounts, usually between $10,000 and $25,000 to cover their burial expenses and other end of life objectives.
What is a Final Expense Policy?
A final expense policy is a whole life policy designed to cover ones final expenses, including burial cost and any other end of life objectives, such as leaving a legacy for kids or grandkids. The terms “Final Expense” or "Burial Insurance" are just marketing names given to a whole life policy designed for a specific need. This focus is different than traditional life insurance polices that focus on income replacement. The demographic of the final expense market is seniors, or near seniors, between the ages of 50 and 85, that are looking for smaller face amounts, usually between $10,000 and $25,000 to cover their burial expenses and other end of life objectives. The average cost for policies in this range is between $60 and $80 per month. While these are typical ranges, face amounts are available up to $100,000 and premiums may be $200 per month or more.
Final Expense underwriting is simple, but it still matters. These plans are usually issued on a simplified basis, which means the client does not have to take a medical exam. The carrier makes its decision by reviewing the client’s health answers along with prescription history and other third-party data. In most cases, that information is evaluated electronically, which allows the carrier to make an "instant" underwriting decision without a traditional human medical review.
Underwriting
We’ve discussed 4 different final expense policy types, level & level 2nd tier, graded, modified and guaranteed issue. A single carrier doesn’t typically offer all 4. They will usually offer 3 at most. The medical questions of the application will be broken down into 3 sections relating to one of the 3 policy types. A typical final expense application will be segregated into 3 sections. The top section (1) contains knockout questions and if any of these is answered “yes” the client will not qualify for any coverage. If any question is answered “yes” in section (2), the middle section, the client will qualify for the “Modified” product”. If any question in section (3) is answered “yes” the client will qualify for the “Level 2nd tier”, or graded product. If all questions are answered “no”, the client will qualify for the carriers lowest cost “level” plan.
A carrier may look great on a quoting tool because the premium is a few dollars lower, but if their underwriting is much stricter, that lower price may lead to more declines, more wasted applications, and more difficult pivots.
Premiums
When you look at Final Expense rates side by side, you’ll notice something important: prices between carriers offering similar products usually do not vary as much at the same health risk level as agents might expect. That is not an accident. Carriers know that if they want independent agents to sell their products, they have to stay competitive on price.
But price is only the part you can see. The bigger difference is usually in the underwriting. A carrier may look great on a quoting tool because the premium is a few dollars lower, but if their underwriting is much stricter, that lower price may lead to more declines, more wasted applications, and more difficult pivots. On the other hand, a carrier that costs a little more may approve more clients and keep the sale moving forward.
At FLIG, we do not teach agents to chase the cheapest quote. We teach agents to evaluate health first, then match the client to the carrier most likely to approve the best available coverage. In Final Expense, underwriting tells the story.
Guaranteed products are most often offered as stand-alone final expense products, rather than a last resort option of a carrier's core product. Guaranteed issue products offered by carriers that specialize in this market can be less expensive or equal in cost to graded and modified plans. So if you determine upfront that a guaranteed issue product is needed, you can quote a specialty product that won't give your prospect sticker shock.
A guaranteed issue plan is a modified plan with no health questions. Since there are no health questions to answer, any health condition will qualify.
Guaranteed Issue
A guaranteed issue plan is a modified plan with no health questions. Since there are no health questions to answer, any health condition will qualify. The benefit paid in years one and two are limited to a return of all premiums paid plus additional interest that will range from 5% to 20%. At the end of policy year two, the policy will pay 100% of the death benefit and will continue to do this for the remainder of the policy. Ideal for clients that are currently dealing with major health issues such as Alzheimer’s Disease, HIV, or that have had organ transplants, wheel chair or bed confinement, or that require home health care services.
Modified
Designed for clients whose health issues are more severe than those allowed on “Level 2nd Tier” or “Graded” policies. The payout will typically be limited to a return of all premiums paid plus additional interest. For carriers that don't sell "Guaranteed Issue" plans, this will be their highest health risk and most expensive plan.
The health issues for graded policies are generally the same as those of a “Level 2nd Tier” policy. So you’ll often be able to find a Level 2nd Tier policy with no waiting period that will cover the same issues as a graded policy with a reduced payout in year one and two.
Graded Death Benefit
These policies are designed for clients that have experienced more severe recent health events such as heart attack, stroke, circulatory surgery, or cancer in the past two years. During the first two policy years the death benefit will be less than the full policy face amount. As an example, a graded policy may pay 40% of the death benefit in year one and 75% of the death benefit in year two. At the beginning of policy year three the full death benefit, 100% is payable to the beneficiary. For example, a $10,000 graded benefit policy may pay $4,000 if death occurs in year one and $7,500 for death in year two. The health issues for graded policies are generally the same as those of a “Level 2nd Tier” policy. So you’ll often be able to find a Level 2nd Tier policy with no waiting period that will cover the same issues as a graded policy with a reduced payout in year one and two. Newer products will use a level and level 2nd tier combination versus the older product design of level and graded.
FLIG terminology for these plans is “Level” and “Level 2nd Tier”. This terminology gives us a consistent way to refer to two plans that have varying names among carriers, that are both level plans.
Three Tier Final Expense Application
If a "yes" in "Section A", the prospect is Not Eligible for any coverage
If all questions are answered "no", the prospect qualifies for the Preferred plan - Level
If a "yes" answer in "Section C", the prospect is eligible for the Standard plan - Level 2nd Tier
If a "yes" answer in "Section B", the prospect is eligible for the Modified plan - 2 year wait
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Final Expense Basics
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