Preneed insurance policies enable the policy holder to customize his/her funeral arrangements, prior to death by paying for the burial products/services. The policy enables the person to customize his/her funeral arrangements. Such a policy offers a variety of products such as a hearse, burial plots, vaults, funeral caskets, urns, flowers, digging and filling the grave, grave markers, and cremation.
The Need for Funeral Insurance
The usual practice of arranging for a funeral was via a trust. An approximate amount was set aside to cover the costs associated with a burial. The concept of funeral insurance became popular because of legal complexities associated with the setting up of trusts. Another reason was the rising cost of burial/funeral services. The National Funeral Directors’ Association (NFDA) has assessed that the interest of people in planning their funerals in their lifetime has increased over time. The average expense for a regular adult funeral ranges from USD 4,500 to USD 5,500. About one-third of that involves the cost of the casket only. To add to that, an in-ground burial can additionally cost another USD 2,400.
People who avail of such a policy feel the need to pay for their own funeral/burial services/products during their lifetime. This is largely done, so as to avoid troubling their near and dear ones with the expenses and efforts involved in arranging for the funeral services post death, while they are dealing with the emotional trauma due to the loss of a loved one.
The increasing costs associated with a graying America has given a kick start to these types of policies. Many senior citizens now have the resources to plan for their eventual death in advance. Many experts feel that buying such a policy should be an integral part of an individual’s financial planning process. The policies offered by insurance companies offering such policies are largely individualized with the cap being determined by an individual’s wallet. There is no limit to the quantum of customization individuals can opt for.
Before rushing off to buy such a policy, people should find their state’s rules/regulations regarding this type of insurance. Make sure that one’s family and lawyer are in the loop. You must also find out details, such as the consequences of policy cancellation by the subscriber and understand how much of the plan value would be received in death benefits. Be sure to check the licenses of the company, its agents, and the funeral director.
Selling Such Policies
Selling such a policy isn’t an easy thing, as death is something morbid, which though inevitable is something most people don’t like being reminded of. Before becoming an agent for burial insurance, the agent needs to understand the requirement of his job. An agent attempting to sell something as sensitive as preneed insurance needs to understand that this product is unlike a regular insurance cover. He would need to sensitize himself first. Convincing people to buy such a policy is easier said than done. A thorough understanding of the prospective buyer’s financial worth and their funeral/burial aspirations is required. People must be convinced that it is worthwhile to plan for death when alive, so that they get the burial service they desire with minimal arrangement related inconvenience to their near and dear ones.
Over-aggressiveness in trying to sell such a policy must be avoided at all costs. Prospective buyers must be provided information of all the aspects associated with the policy that they decide to opt for. Customers must also be advised on whether to go in for a lump sum payment or installment payments depending on their needs and financial position. The agent must guide the clients on all aspects of the paperwork involved.
If you are planning to take a preneed burial policy, make sure that you get it from a reliable insurance company.