Final expense life insurance is a specialized insurance product that helps families with end-of-life expenses for their loved ones. For insurance agents, It's a rewarding field that not only represents substantial income opportunities, but provides meaningful work. Since 56% of Americans don’t have $1,000 in the bank for an emergency, offering coverage of this kind can provide significant support for a family during their dark and difficult times after losing a loved one.
Despite the help you can provide your community and the income you can gain from offering final expense coverage, there are intricacies worth exploring before fully deciding if selling final expense insurance is the right path for you. For starters, not everyone has the personality or disposition to handle conversations with people about the end of life. Even if you have already determined that the meaning you can gain from helping seniors outweighs any difficult conversations, it’s still important to know the facts about final expense insurance.
Read on to learn exactly what final expense life insurance is and what it covers, and to gain insight into today’s market for final expense life insurance sales. If you decide that final expense insurance sales is for you, we’ve also provided practical steps to help you get started.
Final expense life insurance is designed to cover all expenses that come with a person’s passing.
Funeral expenses are the primary coverage a final expense policy provides. Today, it’s not uncommon for the average funeral to cost $9,000 or more. And when it comes to the end of life, there are often additional expenses to consider. Many people have costs to cover such as medical expenses, lawyer fees, unpaid debts, or even household expenses. Additional end-of-life costs range on average from $11,825 to $26,492 depending on a variety of factors, including state of residence. All in all, final expense life insurance can help cover anywhere from $18,500 to $41,500 (the average final expense total costs in 2022, factoring in both funeral fees and additional expenses) — or more, depending on the client’s needs.
At the end of the day, final expense life insurance is a whole life insurance policy that does not expire, that has a monthly premium, and that is guaranteed to pay out. Upon payout, the policy handles expenses up to the policy limit, paying for virtually anything related to end-of-life needs. It is a form of life insurance that goes beyond simply paying a death benefit by providing highly specific final expense coverage.
When it comes to selling final expense insurance, you can rest assured that there is money to be made. The United States has an aging population. Today, there are more than 46 million Americans age 65 or older. By 2050 that number is expected to grow to almost 90 million. Baby boomers represent the largest American generation ever to reach the age of senior citizens. As they continue to age, there will be more people who can benefit from final expense insurance than ever before.
The average final expense life insurance policy provides $600 per sale in first-year commission, with another $50-60 per year in residual income. With the staggering opportunities for sales not only today but in years to come, final expense agents can make a strong income. Overall, the average salary for a final expense insurance agent is $106,428 per year. By comparison, the average property and casualty insurance agent makes $37,473 per year.
Before signing up with a company to sell final expense insurance, it’s extremely important that you fully understand the various types of final expense insurance that the company offers. There are four main categories of final expense insurance you can sell, and each has its own utility based on the client’s current health at the time of sign-up.
One pro tip is to represent multiple companies for final expense insurance if at all possible. Each company has limitations on what it offers, as well as restrictions based on a client’s health. By representing multiple companies, you have a better chance of finding a type of payout plan optimized for your client’s needs.
A level final expense plan pays the policy’s full benefit, regardless of when or how the client passed. Level final expense plans operate in this regard very much like a traditional whole life insurance policy. Upon death, the benefit is paid. This may sound like an obvious way for things to turn out, but other types of final expense insurance don't always function exactly in this manner.
Level final expense plans often provide the greatest value to your clients. If you can get them into one of these plans, they are almost always better protected with this type of coverage.
If a client cannot qualify for a level final expense plan due to carrier restrictions based on their health at the time of sign-up, a graded final expense plan may be the best option. In this scenario — with the client already having known health problems — the insurance carrier understandably takes on more risk, and so provides an altered payout plan.
Instead of paying out the final expense policy’s limit at the time of death in all cases, graded plans pay out a percentage of the policy benefit based on how many years the client had been covered prior to passing.
For instance, if the policyholder dies within the first year of coverage, the plan may only pay out 30–40% of the policy’s benefit (the exact percentages are determined by each insurance carrier). If the policyholder dies after the first year of coverage but before the second ends, the plan may then pay out more, but still be limited to 70-80% of the policy’s benefit. Beyond the second year, the policy would pay out the full value.
Modified final expense plans are very similar to graded final expense plans. First, they are designed for people with pre-existing health issues, though these policies often cover people with substantially greater health challenges than a graded plan. Second, modified plans have the same pro-rated payout limitations that graded plans do, based on the number of years a client has received coverage before passing. However, whereas graded final expense plans pay out a percentage of the policy’s benefit if the client dies within the first few years of coverage, modified plans simply return premiums paid to date, plus a percent interest.
If a client can qualify for a graded plan, the payout is often better than what a modified plan provides if the client passes before enough years of coverage have passed to provide full policy benefits.
Guaranteed issue plans allow people of all health statuses to qualify for coverage automatically. These plans have worse payout schedules than modified plans but do not deny anyone, regardless of health. In the worst case, these policies can still provide families with knowing that they’re getting all the coverage they can get, despite the failing health of their loved one.
When it comes to getting started selling final expense life insurance, the best place to begin is by researching available final expense insurance carriers.
You should begin by researching a carrier's income possibilities, commission structures, plans offered, and their dependability based on their track record. While looking into companies, it’s also important to find out which carriers might help you get licensed (or even cover expenses) and market yourself, as well as teach you specifics of how to succeed.
At the end of the day, though, all you really need to get started selling is to get your life insurance license for your state and get contracted with a carrier (or carriers) that provide coverage.
Once you’re contracted to sell as a final expense insurance agent, you’ll need to keep your sales pipeline full to keep commissions flowing. As your marketing efforts are building for the long term, one great way to speed up your success is to purchase high-quality life insurance leads from Nectar.
Our life insurance leads are real-time, warm prospects currently looking for life insurance in your coverage area. When you work with us, you can set your schedule for when you want to receive leads.
If you decide to start selling final expense life insurance, we’ve got you covered. We utilize the industry’s most cutting-edge technologies and marketing strategies to source the best value leads for you. Reach out today to learn how we can help you jump-start your final expense sales career.
This article reflects the features of Nectar as of the date of publication. Features are subject to change at any time. This article is meant for informational purposes only, it is not a guarantee that using Nectar will help you achieve specific business or financial results and is not intended to serve as the sole recommendation for any business financial decisions.