Friday, February 10, 2012

Preneed Insurance

Pre-need 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. A preneed insurance 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.

Need for Preneed 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. Since, setting up trusts is legally complex, the concept of preneed insurance became popular. Another reason for the rise of preneed insurance is the rise in the burial/funeral services costs. 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 $4,500 to $5,500. About one-third of that involves the cost of the casket only. Even more, an in-ground burial can additionally cost another $2,400.

Most of those who avail of forethought preneed insurance feel the need to pay for their own funeral/burial services/products during their own 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 dealing with the emotional trauma of a loved one having passed on.

Preneed Insurance Companies

A number of insurance companies have entered the preneed insurance market. The increasing costs associated with a graying America has given a kick start to preneed insurance. Many senior citizens now have the resources to plan for their eventual death in advance. Many experts feel that preneed insurance should be an integral part of an individual's financial planning process. The policies offered by preneed insurance companies 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 preneed insurance, people should find their state's rules/regulations regarding preneed 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.

How to Sell Preneed Insurance

Selling preneed insurance 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 insurance agent for preneed 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 a preneed insurance 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 make a preneed insurance sale must be avoided at all costs. Prospective buyers must be told of all 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 insurance agent must guide their clients on all aspects of the paperwork involved.

Hope you found this information on preneed insurance useful. If you are planning to take a preneed insurance policy, make sure that you get it done from a reliable instrance company.