FINAL EXPENSE TERMS

Question 1

What is a LEVEL POLICY

Answer 1

Level Policies

Level Policy Features:

1. Applicant is in Excellent Health
2. Benefits Eligibility: Benefits are paid immediately after death
   Cost of Policy: Cost of level policy is the lowest

Level policy benefits are given to applicants in excellent health. If they’ve had any surgeries, are on any prescriptions, or have any health conditions, check with your carriers of choice to see if they might pass through underwriting.

This kind of policy offers the full death benefit immediately after death occurs. This is the only type of final expense policy that will immediately and fully cover your client.

The premiums for this type of policy are also a little bit less than the graded or modified policies.

Question 2

What are the features of a GRADED POLICY?

Answer 2

GRADED POLICY FEATURES:

1. Applicant has MINOR HEALTH CONDITIONS.
2. Benefits Eligibility: There is a 2-year waiting period.
3. Cost of Graded Policy is higher than Level policy.

Health conditions vary by carrier, but as an example, having Parkinson’s, systemic lupus, liver disease, or COPD might place your client in a graded plan.

Graded policy benefits usually have a 2-year waiting period before the entire death benefit can be paid to a beneficiary. While this is usually the case, you need to cross-check this with your carrier of choice. For example, Equitable doesn’t pay out a full death benefit on the graded policy until the 4th year.

If non-accidental death occurs before two years, the policy will only pay a percentage of the death benefit.

For example:

If death happens in year one, perhaps only 30% of the death benefit will be paid.
If non-accidental death occurs in year two, 70% of the death benefit will be paid.
Death in year three or later will pay 100% of the death benefit.
In case you were wondering, here are some examples of “accidental death”:

Car accident
Falls
Poisoning
Drowning
Fire-related death
Suffocation
Firearms (excludes acts of war and suicide)
Industrial accidents
General accidents (medical professional mistakes, falling objects, air transport injury, etc.)
“Non-accidental deaths” include:

Illnesses
Old age
Suicide

Question 3

What are the features of a MODIFIED POLICY?

Answer 3

MODIFIED POLICY FEATURES:

1. Applicant has serious health conditions.
2. Benefits Eligibility: 2-year waiting period
3. Cost of modified policy is next higher than a graded policy.

Like graded plans, carriers have health conditions that would place your client into a Modified plan, such as alcoholism, angina, stroke, aneurysm, or cancer.

Modified policy benefits usually have a 2-year waiting period before the entire death benefit is paid to a beneficiary. If non-accidental death occurs before two years, the policy will only pay a return of premiums plus a percentage.

For example:

If death (non-accidental) happens in year one, the premiums will be returned plus 10% will be paid.
If non-accidental death occurs in year two, premiums paid are returned plus 20%.
Death in year three or later will pay 100% of the death benefit.

Question 4

What are the features of a GUARANTEED ISSUE (GI) POLICY?

Answer 4

GUARANTEED ISSUE (GI) POLICY FEATURES:

1. Applicant’s health is not applicable, but Guaranteed Issue Whole Life (GIWL) Final Expense insurance: is a great option for clients with major health issues.
2. Benefits Eligibility is a 2-year waiting period.
3. Cost of a Guaranteed Issue (GI) policy is the highest.

GI policy benefits are very similar to a modified policy, but more expensive since there is no health underwriting.

GI has a 2-year waiting period before the entire death benefit can be paid to a beneficiary. If death (non-accidental) occurs before two years, the policy will only pay a return of premiums plus a percentage.

For example:

If non-accidental death happens in year one, all premiums paid will be returned plus 20%.
If non-accidental death occurs in year two, all premiums paid are returned plus 20%.
Death in year three or later will pay the full benefit.
The conditions and percentages shown above are only examples, and they vary by carrier and plan. But with most insurance products, the healthiest clients pay the lowest rates.

Guaranteed Issue Whole Life (GIWL) Final Expense insurance: this Whole Life Insurance product is a great option for clients with major health issues.

Question 5

What expenses is a final expense policy suppose to cover?

Answer 5

What Final Expense Insurance Covers
Finally, this product is made to cover the following types of expenses:

Funeral expenses
Casket/cremation urn
Embalming
Ceremony
Transportation
Burial vault/liner
Burial clothing
Floral arrangements
Cemetery property
Unpaid hospital/medical bills
Travel expenses for family
Unpaid credit card debt
Estate taxes
Please note that the average funeral costs $7,045.