Selling Final Expense – Ep. 6

We begin Episode 6 with a quick overview of the changes that CMS has made to the policies surrounding Medicare Part D plans. The Opioid Crisis has affected the entire country, including Medicare beneficiaries. CMS recognized opioid abuse within the Medicare-eligible population and has updated their policies to combat it. We spend the first few minutes of this episode discussing those changes.

The rest of the podcast dives deep into Final Expense! We bring our own Keith Hinson back for his second appearance on the podcast to go over the basics of Final Expense. He touches on what Final Expense is and all the reasons you should be selling it. This includes simplicity, limited underwriting, upfront money, fewer compliance concerns, and more! Keith also goes over all the different types of Final Expense plans.  

If you’re not currently selling Final Expense and are considering it, this podcast is for you! This is a wonderful introduction to Final Expense and why you should be selling it. If you want to learn more about selling Final Expense, you can give Keith Hinson a call at 615-944-3300 or email him at khinson@seniormarketadvisors.com.

Why Sell Final Expense – Ep. 6 Full Transcript

Sarah: Hello and welcome to episode 6 of Selling SMART with Senior Market Advisors! Today we will be going over recent changes regarding the opioid crisis and how they affect Medicare beneficiaries and then we bring on Keith Hinson to take a deep dive into the basics of Final Expense and why you should be selling it! 

Sarah: Alright everyone we are so excited to have Keith Hinson on the podcast today. He’s actually been on the podcast before so this is his second time on the podcast so welcome Keith! Can you just give us a little background on yourself?

Keith: Thank you Sarah. My name is Keith Hinson and I’m the VP of Life & Ancillary Sales at Senior Market Advisors. A little background on myself, I’ve been in the insurance business for 20 years.

Sarah: Thanks so much Keith!

Disruptive Waves:

Jessica: We wanted to start today off by talking about how the opioid crisis is changing the policies for Medicare Part D plans. By now you likely have heard about how many individuals in the country are affected by the opioid crisis, and this includes Medicare beneficiaries. 

Sarah: It’s hard to find someone these days who hasn’t been affected, I know my cousin was in and out of rehab for prescription opioid abuse for years and is luckily clean now. But it was hard to watch her go through that.

Jessica: Yeah it’s nice that CMS is doing what they can to try and help.

Sarah: So CMS released a blog on their website last month discussing the policies they have put in place to combat this issue so we will be breaking that down for you today. Since Medicare covers a significant portion of prescription opioids, we feel it’s important to go through some of these changes so you are aware. 

Jessica: Please note that these policies are not a one size fits all approach and they do not apply to long-term care facility residents, beneficiaries in hospice or other end-of-life care, or beneficiaries being treated for cancer-related pain.

Sarah: Medicare drug plans will now need to send pharmacies alerts to review certain opioid prescriptions before they are filled. This could happen in cases like:

  • The beneficiary is prescribed an amount that exceeds a certain amount,
  • This is the first time the beneficiary is prescribed the opioid. They may be limited to a 7-day supply or less if it’s a new prescription
  • Or the beneficiary is prescribed both opioids and benzodiazepines at the same time as they can be dangerous when taken together.

If the prescription is unable to be filled as written, the pharmacist will give the beneficiary a notice to contact their plan for a “coverage determination” to see if the plan will cover the drug.

Jessica: As an agent, make sure you are aware of these changes and do your part to help beneficiaries get the right plan for their needs.

All Aboard the Knowledge Train:

Sarah: Alright so today we are going to be going over why you should be selling final expense. As we mentioned, we have our very own Keith Hinson on the podcast today to share his expertise on this topic.

Let’s start off with the most basic question, why should someone sell final expense?

Keith: Well Sarah, there’s lots of reasons that come to mind when we’re talking about the different reasons you’d want to sell final expense.

The first thing I want to touch on is that when we’re new in the industry, all this information can be thrown at you and it can be overwhelming. So the first reason is that it’s simple. It’s just not hard to understand. So if you’re new in the industry and looking for a way to get started, final expense allows you to get up and running really quickly so that would be the first reason.

The second reason is limited underwriting, especially as a new agent, underwriting can be a little bit daunting. When you’re getting out into fully underwritten cases, you don’t know which health conditions to look for and you end up submitting a lot of business that in turn gets kicked back and you do a lot of work that you might not have to so with final expense, there’s very limited underwriting. In fact, some of them don’t have any underwriting. So it takes a lot of that learning curve at bay while you’re developing your skill set but you still have the ability to make some money.

And another reason is not necessarily an agent reason but the consumer. There are some people that want life insurance but maybe they have some health concerns and they don’t think they can get through that traditional underwriting that I mentioned. Maybe they don’t need very much. You know there’s lots of people that get life insurance or final expense policies that maybe they’re only 5 or 10 thousand dollars. And a traditional fully underwritten life plan – most of them will have a limit of about 100,000. There are people like myself, I just hate needles and I will pay a little bit more so you don’t have to come out and stick me. So that’s a good reason also.

Another reason is upfront money. Now not all the time, but a good percentage of the time dependant upon your contract, you get your entire or a big portion of your commission upfront. And since final expense, the majority of your commission will be paid out in the first year, that can help with your cash flow circumstances when you’re getting started in the industry.

Another great reason for final expense is compliance concerns. If you’re in the insurance space depending on what your concentration is, if you’re dealing with the MA space or the Part D drug plan space, you’re heavily regulated by CMS. With final expense you don’t have those constraints. Now what that means is you’re allowed to reach out and contact people directly, you can walk up to them and you can ask them about final expense. When you’re in the house and you finish the presentation, you’re actually allowed to directly ask for referrals which can help grow your business quickly as well.

Another reason, final expense is easy to cross-sell. It pairs well with a variety of senior products. On the MA side of the business and CMS, you can’t sell final expense while you’re on an MA appointment but excluding that, you’re allowed to put a cancer plan with final expense. If they already have a supplement plan, maybe you go out and tell them final expense will pair well with that. So it’s just a good way to either market your existing book or just a good thing to tie together with all the other products you’re selling.   

And then lastly and at least for our company whose mission is to serve the underserved, it fills a valuable need. A lot of individuals that you’ll be out talking about final expense with are those who will need it most. So when that time comes they will be able to make sure that those final expenses are taken care of. And some individuals even choose to leave a small legacy. 

Sarah: Wow! That was a lot of great information. I definitely see there are a ton of reasons to be selling final expense! Thank you so much Keith!

Okay so let’s just go back to the very basics for those of us who don’t have any background on what final expense is, can you just briefly touch on… what is final expense?

Keith: Absolutely, final expense is really just that. It’s to help you cover any of your final expenses. Some people may have heard it referred to as a burial policy but let’s not get caught up in the term burial policy. Individuals have lots of other needs than just being buried in the end. Sometimes you may want to leave a legacy to a child or grandchild, you may have unpaid bills. Maybe there are other expenses other than burial, you want to fly people in from out of town. But in the end, that’s really what it is. To take care of bills when we reach our end of life so our loved ones don’t have to foot or incur those expenses.

Sarah: So is there only one type of final expense or is there different types that agents can be selling?

Keith: Let me do the best I can to breakdown the different types. Not all carriers will offer all types but you’ll at least know what’s available out in the market. 

So there’s really four main types. 

  1. There’s what’s called True Guaranteed Issue and for that particular type of plan there are a lot of them with absolutely no medical questions whatsoever. Only thing you really need is their address, name and their banking information and you’re good. Now with those types of plans, whatever the face amount is, if for whatever reason that individuals was to pass in an accident, it will go ahead and pay out the full face amount. However, if they were to pass from anything related to a sickness, usually within the first two years the premiums that you’ve paid in, plus some percent of that money that you’ve paid in. So at a minimum, they’ll end up getting the premiums that they put in plus a little bit.
  2. The next step up from that is known as Modified and this is the beginning of what most people might call “True Final Expense” vs. a Guaranteed Issue Policy. And it’s really the same as a guaranteed issue, really the only difference is that they actually have to answer a few medical questions and they likely will get a better rate at least across the board than what they would do if they had a guaranteed issue policy.     
  3. After Modified, it’s called Graded and basically you just continue to answer more medical questions. So maybe instead of 2 questions or 3 questions, maybe you answer 5 questions. And the way it’s set up, same scenario. If you were to pass from an accident of any type you would go ahead and get the full face amount from day one. But if you were to pass from some type of sickness, the death benefit goes up each year that you have the policy. So just as an example, the first year, if you were to pass from a sickness, maybe you get 30% of the face amount. If you were to pass from year 1 to year 2 you would get 70% of the face amount. And then usually if you get past 2+ years, you’re fine and you’d get the full face amount whether that be for sickness or accident.  
  4. And then the last type is Level which is pretty self-explanatory is called Level or Level-Issue. That’s really the best rate for the final expense category. You still have even more health questions, however you still don’t have an exam or blood work. You basically answer the medical questions and then they may pull some reports from the MIB and maybe a prescription check. But you get the full face amount immediately – sickness or accident. You would have that death benefit available to you next day.  

Sarah: So in listening to what you just said I just thought of a question. You mentioned a bunch of health questions, as you go up the line there is more health questions. If someone is in poor health, is there rate going to go up?

Keith: So final expense is actually set up pretty neat. Most final expense insurance applications will have a single page that has questions and they usually will be segmented out 1, 2, 3 or a, b, c. So you start out in the first section and usually it’s yes/no. If you hit yes, then they don’t qualify for that policy and you would go automatically to a true guaranteed issue policy. If you get all the way to section 2 and check something, you know you would only qualify for the Modified policy. If you get all the way to section 3 and you were to check a health question, then you would be eligible for the graded level plan and if you manage to get through all the health questions you know that you would qualify for the level plan. So it’s really easy to step through the process and know what to sell individuals.

Sarah: So if anyone listening is interested in selling final expense, Keith, how would they contact you or where would they get more information?

Keith: Absolutely! The easiest way, feel free, my direct line is  615-944-3300 or feel free to reach out to me via email at khinson@seniormarketadvisors.com.

Sarah: Awesome. Really good information today Keith. I definitely feel like I understand final expense a little bit better than when we started so hopefully you all listening feel the same way!

Ending on a Positive Note:

Sarah: To end it on a positive note, we had a submission from one of our agents named Michael. Thank you for your submission Michael! We’ll go ahead and read what he wrote. Note that names have been changed for privacy purposes.

Jessica: “I want to share the story of a special client. I represent an I-SNP (this is short for Institutional Special Needs Plan) plan and recently enrolled a client named Stephanie. She has been living in a nursing home for several years even though she is only in her 50’s. You see, she has cerebral palsy. Many things stand out about Stephanie. First, she was worried that going into a nursing home meant that no one would ever visit her anymore. Happily she has found that wasn’t true and her family still visits her on a regular basis. Secondly, she told me that she loves to read  and always has at least one book with her at all times. Three, she is also a writer and poet. She has written over 200 wonderful poems to date and would like to publish them someday but it can cost a lot of money to get published. Finally, and what is most amazing is her smile and spirit. I look forward to driving 1.5 hours to the nursing home just to see her. I thought I was helping her by providing a comprehensive healthcare plan to cover all of her needs and in the end she has helped me be more grateful, inspired and dedicated to serving others. Maybe one day the world will be reading her poems!”

Alright, that’s all folks! Thanks everyone for joining us this week! 

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Interested in learning more about Senior Market Advisors? Give us a call at 844-334-6066. Want to be featured on the podcast? Visit us online at www.seniormarketadvisors.com/podcast and share your story. 

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Sarah: We appreciate you joining us today on Selling SMART with Senior Market Advisors!