The Hidden Opportunity in Every Policy

We’ve all been there: sitting with a sweet, older lady who wants more insurance but just can’t afford a higher monthly payment. Maybe she’s holding onto a Colonial Penn Graded policy or a Lincoln Heritage policy that, while expensive, has become unbeatable in terms of price. Even with access to the best carriers, you might find yourself stumped. So, you shake her hand, tell her she’s got the best deal she can get, and move on to your next appointment.

But wait—have you actually seen the policy yet?

The Importance of Checking the Policy

Don’t leave money on the table! Many clients don’t know the specifics of their policies. Before you give up, always check their policy details. If they can’t find the policy, call the insurance company. Get the policy number, face amount, type of policy, premium, current cash value, reduced paid-up (RPU) option, and extended term option.

If a policy is over two years old, there are often multiple surrender options available.

Understanding Policy Values

When you look at the policy’s table of values, you’ll typically see columns for the face amount, premium, cash value, paid-up (RPU) option, and extended term option. Most of us know about cash values—clients can take loans against them or cancel the policy for the cash value. This can sometimes be enough to secure a replacement sale.

For example, if a client has a three-year-old policy with $500 in cash value, you might pitch it like this:

“Right now, you’re paying $50/month for $9,000 in coverage. We can upgrade you to $10,000 for the same $50/month, and you’ll receive a $500 check from your current insurer. We handle everything, so you won’t have to do a thing. Now, who do you want to leave the $10,000 to when you pass?”

Leveraging the Reduced Paid-Up Option

Sometimes, you can’t beat the price with a new policy. This is where the Reduced Paid-Up (RPU) option comes in handy. RPU allows the client to convert their policy to a paid-up option, stopping premium payments but ending up with a smaller face amount. The RPU amount is typically 1.5 to 2 times the cash value.

Real-World Application

Let’s say you find a client with a 10-year-old Western and Southern policy. They’re paying $50/month for $5,000 in coverage, with $2,000 in cash value and a $3,500 RPU option. You can only offer $3,000 in new coverage for $50/month, which seems like a dead end.

But here’s the trick: if they convert their policy to RPU, they get a $3,500 paid-up policy and have $50/month to spend on a new policy. You can add a new $3,000 policy for $50/month, giving them $6,500 in coverage for the same monthly payment. They just got something for nothing!

Simplifying the Pitch

Explaining the intricacies of RPU can be confusing. Instead, pitch it as a way to get more insurance for free or use an “Either/Or” close.

Example pitch:

“Great news! Because you’ve been paying on this policy for so long, you have some great options. You can either keep your death benefit at $5,000 for $70/month and get a $2,000 check, or keep your payment the same at $50/month and increase your coverage to $6,500 for free. Which would you prefer?”

Then, stay silent. The first to speak loses.

Learn More and Increase Your Sales

If you want to earn more by selling Final Expense, visit www.learningfe.com/learnmore.

Josh Jones is an expert in the Final Expense market. Together with his business partner, Brandon Smotherman, a $400,000/year Final Expense producer, they teach agents how to replicate their proven system. Whether you’re new to the Final Expense market or a veteran agent looking to increase your income, Josh and Brandon have the knowledge and resources to help you grow your business.