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October 04, 2016 at 02:00 AM
How do you feel about working from your home or an office, controlling your own hours, having low expenses, making a good living, and being involved in a growing market?
If that sounds good, you need to take a look at selling final expense life insurance over the phone. That’s right, selling it from the comfort of your own home. It can be a very profitable endeavor if done right.
Related: Should you be selling final expense insurance?
I know the majority of final expense coverage is sold face to face, and there’s absolutely a segment of the market who would never buy over the phone. But there’s also a growing number of seniors who will buy coverage without an in person meeting.
I recently asked Anthony Martin from ChoiceMutual.com about his success and focus on selling final expense by phone. What follows are some of his insights.
Why sell final expense in the first place?
The answer is multi faceted, and that’s a very good thing. The reality is, final expense offers many benefits that are not available when you sell other types of life insurance. Additionally, the final expense market is huge and massively underserved. By and large, the laws of supply and demand heavily favors agents who sell final expense.
Big market
The typical final expense client is between 62 and 68. You are probably aware of this familiar baby boomer statistic, but it’s just too significant to ignore. 10,000 seniors per day are turning 65. Many of them today are in need of a plan to pay off their funeral expenses. This is like a conveyor belt of new customers who need what you are selling.
See also: Final expense policies spring to life
Unquestionably, final expense has the shortest sales process for any type of life insurance. (Photo: iStock)
Lightning fast sales process
The overall process may vary a bit between face to face selling versus selling over the phone. Having said that, it’s generally a one call close that typically takes less than one hour. There is very rarely any kind of follow up involved. It’s just the nature of the product and the target market.
See also: 10 sales behaviors that prospects hate
Compare this to the average sales cycle for an agent who sells term life insurance. Easily, they expect at least 30-45 days from first contact to policy issue for fully underwritten clients. Also, the average sales cycle for universal life and traditional whole life is well beyond 30 days. As you can see, final expense offers you a super quick and efficient sales process.
See also: How to improve your clients’ life underwriting odds
Instant case decisions
As previously stated, the final expense sales process is typically a quick one call close. This is only possible because of the way the insurance companies have designed their products. Most insurers have a point of sale interview as part of the overall application process.
Basically, the insured, the agent, and the company will complete a three way phone call. On the call, the company will get all the necessary authorizations from the client. This will enable the insurer to run prescription history checks, and scan for any relevant records on file with MIB.
Additionally, they will formerly ask the client all the health questions. In the end, the insurer has all the information they need to perform their risk analysis. By the end of the call, the vast majority of final expense insurers will render a final decision regarding your applicants eligibility.
Don’t you just love that little feeling you get when a policy is issued? Who doesn’t appreciate that moment in time when money is made. When you finally get that notice from the carrier about a policy being issued, it has a special way of brightening your day.
On a more serious note, if your client gets approved for a rating other than applied for, you can deal with it on the spot. How many times have you had clients refuse to try again once you delivered them some bad news days or weeks after the initial application? Well, in final expense, this is a non issue.
High commissions
Presently, street level contracts with no proof of production are usually between 110 and 120 percent. If you have a history of respectable personal production, you can easily warrant 125-135 percent commission rates.
Understand that every insurance company offers slightly different commission. However, they are all fairly close to one another. Furthermore, your IMO will be a huge factor in what kind of commission rate you get with the various insurers.
For the most part, a brand new final expense agent, with no experience or past production, can start out with many companies at 120 percent. The average case size in final expense is right about $600 in annual premium. If you do the math, you can see why final expense is a very attractive opportunity for brand new agents.
If you have an organization with ample production, you can surely command commission rates above 135 percent. Again, it will depend on the insurer and your IMO. For example, if your IMO is currently sitting at 140 percent, your cap will more than likely forever be 135 percent. Remember, the fewer people between you and the carrier the better. Just make sure you investigate the hierarchy you are considering before you sign on the dotted line.
Going direct with some carriers is possible, but only a select few allow this. For those that do, the commission rates they offer are usually lower. Since there is no IMO or NMO between you and the carrier, their financial exposure is higher. This is why their direct contract commissions are typically lower than average.
Related: How to successfully transition to a fee-based practice
Speedy commission payouts
In addition to the very high commissions, you get the benefit of being paid incredibly fast. The majority of final expense business is now being paid once it’s approved. Most life insurance business is paid upon the first draft date. In final expense, you can sell a policy today that drafts a month from now, and still get paid on that deal tomorrow.
Again, not every carrier allows this, but most do. Furthermore, your IMO will also heavily influence if this is even available to you. In general, though, being paid upon policy approval is commonplace in the final expense business.
Extremely diverse underwriting among carriers
Presently, there are dozens of independent insurers that offer a final expense product. Because they all compete with one another, their products are all usually different in subtle ways. The net result is having many underwriting niches that can cover a variety of common health conditions present in the final expense market.
More than likely, there is a carrier out there with a final expense product that has underwriting designed to accept your client’s health conditions. This has many advantages to you as the agent. First, you don’t lose a deal due to high prices and/or waiting periods. Also, you get higher commissions. Every insurer will pay a higher commission on a level (healthiest rating) priced product compared to a rated up plan. It’s a also a massive value to your client. They are able to obtain coverage that will likely have no waiting period, and it comes with bottom tier pricing. Score yet another point to the free enterprise system.
See also: Using behavioral economics in underwriting
In essence, final expense is just a simplified issue whole life policy. (Photo: iStock)
What in the world is final expense anyways?
Honestly, final expense is just a marketing term. There is no official entity that designates a precise definition for the term “final expense.” In essence, final expense is just a simplified issue whole life policy. The face amounts are usually between $2,000 and $30,000.
Seniors who purchase final expense overwhelming do so for one major reason. It’s the only way they can have a vehicle that ensures their funeral costs are not left as a financial burden to their family. On the flip side, a select few buy final expense to pay bills or leave money to loved ones.
See also: Insuring the financial future of the sandwich generation
Another key differentiation about final expense is the underwriting. Point blank, the underwriting on final expense is incredibly lax. These final expense companies accept a lot of very serious health problems.
As we already said, the diverse selection of carriers has yielded many different underwriting niches. For the majority of health conditions present among most final expense customers, there is usually a plan that willing accepts them. The only question is, which carrier offers it? Thankfully, there is almost always one out there that does.
In one sentence, final expense is just a very loosely underwritten small face amount whole life policy meant to cover end of life expenses. There are many articles on the web about final expense. It’s sad because many of them usually claim that final expense policies all come with a two year waiting period. Nothing could be further from the truth. The reality is that most final expense applicants can and do qualify for immediate first day coverage with some company.
See also: Retirees often choose high-risk income strategies
Why sell final expense over the phone?
As said, final expense, regardless of the medium, is a rewarding opportunity for all the stated reasons. The market itself is massive and growing daily. Put simply, there is a big opening to make a very healthy living servicing this market. You can sell final expense face to face. Truthfully, most final expense business is sold that way. However, selling final expense over the phone offers you some unique benefits. Consider the following:
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- No driving
- You can work normal hours
- Very low expenses
- Very high level of flexibility
- Growing business model
This can be done from your own home or in a call center. There are lots of reasons why people might want or need to work from home. Regardless of your specific reason, if you must work from home, selling final expense by phone can be the perfect opportunity for you to earn a good living that conforms to your personal situation. On the other hand, if you are a person who wants to work in an office, a call center could be a great fit for you.
See also: 7 ways to increase your work at home productivity
Almost all the major final expense carriers have a complete voice signature process in place. This allows the client to completely apply for, and sign the entire application, without ever physically seeing or touching a piece of paper.
Presently, well over 90 percent of all final expense is sold face to face in the client’s home. The reason for this is quite simple. It all has to do with their level of comfort. The cold hard truth is that nearly all final expense customers are very comfortable buying insurance from someone they can touch. Alternatively, not all of them are comfortable buying insurance from someone they have no clue is real or not. In spit of this fact, there are still plenty of final expense customers who are more than willing to buy over the phone if you have the proper sales process in place.
Related: Surprise clients with a personal touch
Below is a breakdown of three age brackets. Each bracket carries its own level of difficulty getting clients to more forward without truly knowing who you are.
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- 76-85: Highest
- 66-75: Medium
- 50- 65: Low
All in all, baby boomers over the age of 65 were just too young to fully experience 21 Century technology. As such, they, on average, are not comfortable transacting business in a nontraditional format.
