June 14, 2021

A Beginner’s Guide to Final Expense Insurance: Everything to Know

by ILIAA

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Are you thinking of selling final expense insurance? If so, this can be a savvy career move.

Reports indicate that the final expense insurance is rapidly expanding and set to see huge growth by 2025.

If you are breaking into insurance sales, final expense is one of the most lucrative types of insurance to focus on selling.

However, before you start, you must understand how final expense insurance works. Otherwise, you won’t be able to sell its benefits to your clients or advise them when to take out a final expense policy, what type to choose, and for what amount.

Kick start your understanding of final expense insurance now by reading this post. Here we get into everything you need to know as a beginner who is still learning about the different types of insurance products you can sell. 

How Final Expense Insurance Works

Final expense insurance is a whole life policy that covers the final expenses incurred at death. This means that not only does it cover funeral costs, but it can also be used to pay for outstanding debts, lawyer fees, household expenses, and medical expenses.

Because final expenses insurance is a form of whole life insurance, it does not lapse. This means it will be valid at the time of their death, providing they have kept up with the premiums.

However, this doesn’t mean that clients should take out final expense insurance at any age. We get into what age is best for taking out final expense policies below.

Unlike other types of funeral insurance, holders can designate a beneficiary of their choice with a final expense life insurance policy. This is typically a spouse or close relative. The policy is paid out to the beneficiary at the passing, and they can distribute it as they see fit.

Like most other whole life policies, final expense insurance comes with a cash value. However, this is typically a low amount, given the nature and value of final expense policies.

Why Your Clients Need Final Expense Insurance

Now that you know roughly what final expense insurance is, let’s take a look at some of the reasons why your clients may need it.

Understanding the value of different types of insurance products and serving your clients is essential for successfully selling insurance. If you haven’t grasped the benefits of an insurance type, clients aren’t likely to either.

Funeral Costs Are Far Higher Than Most People Realize

One of the biggest reasons for clients to take out a final expense policy is that funeral costs are far higher than most of us realize.

According to estimates from the National Funeral Directors Association, the average cost of a funeral in the US is $7,640. However, this is just the funeral and doesn’t include the other associated costs of passing away.

Chances are, when your client passes away, their family will have to cover far more than this. Things like outstanding medical bills, utilities, taxes, and other debts may need to be paid. In addition, the family might also encounter unforeseen personal costs, such as travel.

All of this can add up and at a time when loved ones are least emotionally equipped to deal with pressing financial matters.

Undoubtedly, most of your clients want to make sure their loved ones aren’t placed under a financial burden when they die. Final expenses insurance guarantees that this doesn’t happen. Because the benefit is paid out to a selected beneficiary (usually someone close to the diseased), the money can be used for any needs that arise during the time of loss.

This ensures that close family members won’t do without, even if they encounter unexpected expenses.

Final Expense Insurance Covers More Than Just Funeral Costs

Final expense insurance is a lump sum and can be used to pay for anything related to the holder’s death.

It is important to stress this to your clients who are interested in final expense insurance. Most people looking to take out life insurance or a funeral plan are doing so because they don’t want their loved ones to be financially impacted when they pass.

To help them understand why final expense is a more comprehensive solution than other options, layout to clients the different expenses the family may face besides the funeral cost.

These include:

  • Probate or legal fees
  • Outstanding debts
  • Medical bills
  • Taxes
  • Utilities
  • Credit card balances

Explain to them that if they take out adequate coverage, it will cover these expenses and ease the stress placed on their loved ones at the time of their death. 

According to reports, 40% of American families can’t cover an unexpected expense of $400. The unforeseen costs can creep up when someone’s death can easily surpass this amount, especially if it is several years in the future when costs might have risen significantly. 

Final Expense Insurance Gives Peace of Mind

Insurance is all about intangible benefits, and it’s up to you as the insurance agent to sell these to your client.

In the case of final expense insurance, the biggest intangible benefit is peace of mind. It’s the knowledge that no matter what, their family won’t be thrown into financial trouble, thanks to the expenses that come with their passing.

Instead, they will be looking after their loved ones, even after they have passed on. This can be a very comforting thought to a lot of people, especially as they get older. Make sure you emphasize this and make it clear to your client that it won’t have lapsed when their loved ones need it because final expense insurance is whole life insurance. 

At What Age Should Clients Take Out a Final Expense Policy?

When advising clients on final expense insurance, you must factor in their age and coverage. If you don’t, your client might pay out more than the value of the policy over time.

Final expense insurance is not designed for young, healthy individuals. It’s not even meant for healthy seniors. Instead, it’s best taken out by people who likely didn’t plan and might be a little unhealthy.

When estimating whether your client is the right age for final expense insurance, a rule of thumb you can use is that if your client is healthy enough to pass underwriting and live another 10 years—they should have an underwritten policy, especially if they can accord it.

Calculating what is the most financially savvy choice for your client is important. If they feel like you have saved them money, they’re likely to become one of your best referral sources.

Explaining the Cash Value of Final Expense

As mentioned above, most final expense insurance policies accumulate a cash value over time. This can be a selling point for final expense, and you’re likely to have clients asking you about the cash value benefit and how it works.

However, it would be best if you didn’t oversell this aspect of the policy. 

Although final expense insurance does accrue a cash value, this isn’t very high. What’s more, it’s not really that big of a benefit with the way that final expense insurance works.

If clients are asking about the cash value in final expense insurance, make it clear to them that within the first five hours or so, they’ll be lucky to see a cash value of more than $200.

If they maintain the policy for 10-15 years, they might see a more sizable cash value accrue, such as $2,000. However, at this point, they will have most likely more than paid for their death benefit.

Therefore, aiming to accrue a high cash value in a final expense policy is not a financially savvy goal. What’s more, withdrawing the entire cash value can put one’s whole policy at risk.

For these reasons, we would recommend that you warn clients against choosing final expense insurance just because it can grow a cash value.

Learn How to Sell Final Expense Insurance With ILIAA

Before you start selling any insurance, it’s vital that you understand the details of the product and who it’s best suited for. While we have covered the basics of final expense insurance in this guide, there’s lots more to learn, both about FE and insurance sales as a whole.

If you are beginning your insurance sales career, now is the time to invest in education. Without the right education, you won’t see the sales numbers you need and want.

ILIAA gives you access to industry-leading training and education. We also offer support, mentorship, and once-off consultations for those knotty problems you can’t solve independently.

Insurance is an intricate field, especially in the beginning. If you’re ready to prime yourself with the right knowledge and kickstart your insurance career, take a look at our affordable membership pricing right now. 


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