10 Common Myths And Misconceptions About Final Expense Life Insurance – Podcast Episode 35
0:00
In this podcast, I’m going to be discussing 10 Common myths and misconceptions about final expense life insurance. Let’s dive right in. Because we got a lot of stuff to cover today. The number one common myth or misconception about final expense life insurance. Is it final expense insurance is the same as life insurance. Well, that would be like saying, hey, one car is the same as every other car, right? We know we’ve got different brands and different models and stuff like that.
1:00
So final expense, life insurance is life insurance. But so is term life insurance. So as universal life insurance annuities are actually covered under the life insurance flag. So yeah, just there’s a lot of different ways to look at it. So final expense life insurance is built around whole life, insurance and whole life insurance is going to last your whole life all the way up until age 121 years old.
If you’ve got a need a financial need, like paying for a burial, cremation, final expenses, funeral funding anything like that, don’t you want a policy that is going to last forever, that you’re never going to have to worry about you dying in time for the policy to pay out. And so worst thing in the world, you don’t want to go Oh my My insurance policies ending next week, I hope I die in the next week to get it paid out? No.
1:53
So final expense insurance is based off whole life insurance, you don’t have to worry, when you’re going to die. Term life insurance, you always got to worry about when you die, and you kind of you there’s a little bit of a risk involved there. That’s why Term Life insurance is so much less expensive than whole life insurance. Now, I will kind of one caveat there is most of the time we’re looking for larger policies for term life 250 500,000 million even more.
The thing is, with the final expense insurance, we’re looking at Whole Life Insurance for smaller coverage amounts, maybe 5000 10,000 15,000 20,000, depending on if you’re going to be buried or cremated, or how simple or how lavish that ceremony is going to be. So the interesting thing is that, you know, even though we’re talking whole life insurance, which is generally more expensive than term, the final expense policies end up being quite a bit less than the term life insurance policies. Because we’re just covering specifically for the need of final expenses, and only getting enough insurance to do that. We’re not over insuring, like what we do oftentimes, in term life insurance, you go well, why why would I ever over insure for term life?
3:09
Well, if you make $100,000 a year, having a 500,000, or a $1 million policy, to provide money for your family, is not a bad way to go. That’s a great way to over insure, because you just don’t want to have like, you know, one year’s worth of income, because what if your kids are like five and six, or two and three, what’s one year of income going to do for your your spouse or partner or a loved one. I mean, it helps in the next year. After that, they’re kind of thrown out to the wolves.
So we want to make sure that we get enough money in the long term. But by the same token, if you’re if you got a one and a two year old, you know, if you get a 20 year old, a 20 year term policy, then that’s going to last until the children are legally adults, and probably be able to pay for your college education, as long as you’ve got the right coverage amount. So yeah, there’s a lot of different types of insurance out there. And a lot of them are kind of just based off the need that they are intended to pay at some point in time.
4:11
The number two common myth or misconception about final expense life insurance is that final expense insurance is only for seniors. And so primarily, it is intended for people aged 50 to age 85, whether you want to call somebody age 51 or 52 at 53 or for a senior. That’s debatable, all’s I know. Is AARP sending you all sorts of garbage in the mail the minute you turn 50 So I guess yeah, you could be but um, yeah, it’s so it’s not just for seniors, you know what we help people that have maybe been impacted by a disability and they’re unable to work and they want to make sure that they You know, at age 42 years old, that when they pass away, nobody’s going to be burdened with any of their expenses.
We’ve also had parents that will buy a whole life policy on a child or a grandchild, knowing that, you know, the worst thing in the world, aside from losing a child or a grandchild, is having to come up money with money to pay for all this stuff, is just the absolute most stressful and most tragic time in somebody’s life. So there is always a place for a at least one type of insurance product for most people.
5:39
You know, if you’re a billionaire, you know, you, you know, do you need insurance? You might think No, but you know, now they’ve got big estates, right? So now they’ve got to protect the estates, because they’re going to be family is going to be paying inheritance taxes. And families can lose estates and legacies, just because they make too much. So. Yeah, you know, insurance products, and life insurance products specifically, have a place for a lot of people, but it’s going to be very selective based on your situation, what’s going to be most appropriate.
6:14
Our number three common myth or misconception about final expense life insurance, Is it final expense insurance is expensive. And contrary to popular belief, as I already mentioned, for the final expense insurance, we’re not getting hundreds of 1000s of dollars or millions of dollars worth of coverage. In most cases, we just want to make sure that our family, our loved ones don’t have to pay our burial or cremation cost.
So we don’t need to go crazy on the coverage. I mean, if you’re gonna get buried, $10,000 might be enough, you know, we think that you should consider a little bit more just because we know inflation plays a role and prices going up. And if you expect to live another 1015 or 20 years, or you at least hope to, you should allow some money in there for some inflation. And so instead of maybe 10,000, maybe get a $15,000 plan.
But if you’re on a fixed or limited income, and you can only afford 10,000, get the 10,000 right now, because we can always help you add more coverage later, whether it be another 5000 10,000, whatever it would be, just understand that, you know, if you don’t have the money, and it would be a struggle for your family, get what you can afford, right now, these policies are smaller policies, most companies offer they keep it $25,000 or under, there’s a few companies that go higher, but in very few cases, are you going to need 40 or $50,000, for a burial unless it’s just going to be like the fanciest things and you know, the governor is going to show up, I don’t know what it would be. It’s just, that’s a lot of money.
7:59
Now, sometimes people will say, Well, I just want to leave some money behind for my kids or something like that. Well, you know, if you’re on a fixed or limited income, or on disability or something like that, it’s probably the wrong time to be like over insuring. And I know your kids would love the money, right? Matter. No, they, they’d love having you, right? They would certainly not turn away any money. But I always tell the people, that least I hope that, you know, your kids and family members or loved ones are going to appreciate you more, if you spend that money on them while they’re alive, not waiting till you die to give them money.
So just keep in mind, you know, we do have people that say, Wow, if I can’t do 50,000 And give money to the kids, I’m not going to do anything. Well, you’ve just pardon my language, but you’ve just screwed your children. And now they’re going to have to pay for your your cremation or burial out of pocket when you could have just got something more modest to take care of that. And they would have been grateful beyond belief. So just don’t be honoree and I don’t mean to get contentious here but just don’t be honoree. So just do what’s right. Remember, if you can’t afford like get some right now you can always have more coverage later.
9:15
Our number four point in common myth or misconception about final expense life insurance is that medical exams are required. No, that’s not the case not with final expense life insurance. It’s Simplified Issue, which means you don’t have to go to the doctor. You don’t have to have a nurse visit you. You don’t have to get urine samples and get blood samples and all that other stuff. The only thing they will do is check your prescription record background. And they know that if you’re on nitroglycerin, you got some serious heart problems, and they’re probably going to be a little bit worried about that.
They know that if you’re on Metformin or insulin, they’ll know that you have diabetes and Diabetes is a non issue with almost every insurance company out there. If you’re on listener, Perl or Losartan, or am load opinion, they’re going to know that you have high blood pressure, and they don’t care as long as you’re taking your medications, and everything’s under control. So, but if you’re on a memory medication for dementia, yeah, they’re gonna care about that one. So it just really just depends on your prescriptions.
10:27
But that’s why we work with so many different insurance companies, because they all ask different health questions. And they all have different underwriting processes. And we specialize in first day coverage or benefits. And right around 90 95% of the time, we’re able to get people first day coverage or benefits at really affordable rates.
10:49
Our number five topic on common myths or misconceptions about final expense life insurance, is it’s difficult to get approved for final expense life insurance, that is not the case, really right around 90, again, 90 95% of the people we help are going to get an approval the same day over the phone, and you don’t even after have the policy start, we can actually get you approved over the phone.
And then we can have your policy start at a later date. Most of the time, that would happen when somebody says hey, I want to get approved. But I don’t want the policy to start until my next Social Security or disability pay date. And we’ll go, let’s get you approved. And we’ll just delay the billing. And that way you know you’ve got the approval locked in. And that way, your payments going to fall on your next payday it’s not going to be in the middle of the month. And it’s going to be affordable for you now, and will in to the future.
11:47
Our sixth common myth or misconception about final expense life insurance is the coverage amount is limited. Well, it’s not necessarily limited. Most of the companies do offer smaller policies. Most companies would offer $25,000 or less, there’s some companies that go you can get as little as one to 2000. And there’s some companies that start at 7000. But they may go up to 35,007. And then you’ve got other companies that you can go from 5000 up to 40,000. It just depends. And you can always bundled policies, you can always get more than one policy.
But as I mentioned earlier, the most important thing is have the insurance, kind of the equally as important is to have something that fits your budget, because you don’t want to start something that you’re not going to be able to maintain over the time. And these are permanent policies. And we want to make sure that they are always enforced because none of us knows the day or the minute we’re going to pass away. So don’t go crazy. Don’t Don’t be saying hey, I want to final expense life insurance plan for $2 million. No, don’t do that. If you want to million dollars, let’s have a different conversation. And I we can we can walk through that individually with you.
13:07
The number seven reason or a common myth or misconception about final expense life insurance is that the funds can only be used for funeral expenses. No, no, no, no, they’re for final expenses, whatever that might be. So let’s say you had a $20,000 policy, and you found a place that would do the burial. A to Z for $10,000. There’s $10,000 left there, well, maybe you had some medical bills, right, because you a lot of people get sick and die in the hospital.
So there’s bills, or there’s money to pay those bills. You know, if if you wanted to maybe leave some extra money over to children, or grandchildren’s, and there’s a little bit of extra money there, maybe you had some credit card debts that needed to be paid off. And if you didn’t pay those credit cards off, they’re gonna come after the money in the final estate, that’s a great way to get that stuff paid off.
Maybe you as you pass away, and you’ve got a surviving spouse. And that little bit of extra money would just be the world to them to cover rent or, you know, to make the payments on the house, you know, to stay in the house or make the payments on the house while they sell the house and downsize. So there’s all sorts of things that you can do with the money. And it’s all just related to final expenses, but the the the beneficiary is going to get a check and they will just follow through on your wishes. And that money will be there for anything that comes up.
14:34
Our number eight common myth or misconception about final expense life insurance is that final expense insurance is unnecessary if you have savings. Oh my gosh, this is a huge one. A lot of people will say, Well, I’ve got 15 or $20,000 in the bank. And you know, I’m 75 I’m in pretty good shape. Yeah, what happens if two weeks from now you have a heart attack and you go into the hospital and you’re in there for three weeks, there goes the money.
And we just never know, you know, just, maybe you have an event at your house or, you know, in that maybe a lightning strike, and you got to replace a whole bunch of appliances, boom, they’re gone. There goes the money, right. So we always tell people that, you know, even if you’ve got savings, don’t really factor that in to final expenses, unless you’re going to go pre pay for it, we really don’t recommend pre painted pre paying stuff, either.
Because now you pull those funds out, and they’re locked up forever, you want to keep money liquid, and you want to transfer as much risk away from your liquid funds as you possibly can. Which means final expense insurance is a great way to do that you transfer the risk away from your finances, in place that risk on to an insurance company. So you can keep your 10 or $20,000 in the bank. And then for a low monthly premium, you just have this insurance policy that’s going to pay 10 or $20,000.
And even if all your money in your bank account disappears for any number of reasons, now you’ve got the insurance policy. And a lot of times that money would disappear from your bank account because you’re sick, and you’re ill, and you ended up in the hospital. And what’s the worst time to get final expense insurance, you know, when you’re sick or injured or ill in a hospital or just you know, shortly thereafter, because chances are your your options are going to be limited to getting coverage because what just happened in hospital. So the the insurance, the final expense insurance, works really great actually protects the savings protects your family, it’s a great way to transfer that risk to an insurance company.
16:52
The number nine common myth or misconception about final expense life insurance is that you can’t purchase final expense insurance if you have existing life insurance. Oh, that is so wrong, we help so many people that already have a policy. And, you know, let’s let’s see somebody’s got a $7,000 policy, and they took that out 1015 years ago. And at the time, that was enough, that would have taken care of a burial. And they have been blessed to live this long. And now they’re looking at it and go, I need more coverage.
So we can easily add another 5000 or 7010 1000, whatever they want, we can easily add more coverage to that you can own multiple life insurance policies. Now. With final expense, you can have as many as you want. If you were looking at term life insurance, the insurance companies are going to want to kind of take a look at some things like if you make $40,000 a year, they’re not going to give you a $10 million policy, right? There’s gonna be some financial vetting going on there. But not an issue with whole life insurance. And And again, we don’t recommend you over insurance over insure with the final expense life insurance.
18:15
The number 10. And our last common myth or misconception about final expense life insurance. Is that final expense life insurance is a scam? Well, no, that’s not true. There are a lot of policies out there that seem very scammy, I will give you that a lot of times it’s those ones on TVs that they’re gonna say, you can get a one unit of coverage for 990 Something month, and then you read the fine print and like one unit of coverage at your age is going to only pay out like $432. Now you got to stack all these units, and it gets so expensive.
That particular company is quite often right around 200% More expensive than our best price first day coverage plan. So we don’t recommend that all and weren’t. You know, we’re not saying that’s a scam. But boy, I tell you what, read some of the reviews. And you’ll find people really don’t like those plans. We don’t encourage those at all. And then there’s the plans out there that say hey, you can get started for $1 a month. Anything that’s got a teaser rate, that seems too good to be true. You need to be really cautious about you know, those dollar a month one for the first month. That’s a term life insurance policy and the policy the rates are gonna go up every five years and it’s gonna cancel once you get beyond age 80.
19:37
Now, think about this. What do people on the fixed or limited income need? They need steady, transparent pricing that’s not going to change on them in the future. And they need to plan that’s not going to die before they do. So Term Life insurance is just about the worst possible product you can get. If if you’re needing that money for final expenses. And the reason that is a little less expensive right off the start is because they just want to get your attention they want to get you in.
And then every five years, typically every birthday that ends with a one or a six, so like age 61, and age 66, they’re going to jack up your rates, they’re going to re index your rates to your current age. And typically, it’s only one or two cycles of price increases, and then that policy is now more expensive than the whole life policy would have ever been. And then the price increases every five years in the future, are absolutely punishing. And what ends up happening is, most people, the payments get so expensive, from the five year price increases, they gotta cancel the plan, or they outlive the plan. And therefore that plan has been nothing but profit to the insurance company. And that’s why they can charge you the lower rates right off the bat. And that’s how they get you hooked.
20:52
So be an educated consumer. There are some products out there that seem very scammy and, you know, use your your, your baloney detector, your BS, I guess another way to say, your BS detector. And if it sounds too good to be true, it probably is. And we can categorically say that most of the stuff you see on TV, or the stuff that arrives in your mailbox, it’s unsolicited. You should categorically just avoid that stuff like the plague it is not as a rule worth the paper or the time you’ve spent to watch that TV commercial. So that’s the 10 common myths and misconceptions about final expense life insurance.
NOTE: Show notes are AI transcribed, so there may be some spelling or grammatical errors.
