Earlier in August, partly through this press release, Aflac announced that they will be entering the “Final Expense” insurance market and made a point of detailing a strategy aiming consumer directed products at the Senior insurance market.  Not only will Aflac offer a Final Expense product but they will also be rolling out a Medicare supplement product.

Here’s what Aflac Deputy U.S. President Virgil Miller says of the product roll-out, “This product expansion represents not only new offerings, but a bold new senior strategy that leverages Aflac’s strong brand recognition and affinity, particularly with retiring Americans who are seeking to continue their trusted relationship with Aflac . . . . “

Aflac’s parlay into the Final Expense market will be with a whole life product available for those aged 45-80 years of age.  Benefit amounts will be available from $2,000 to $50,000.  Here’s what Aflac’s Jeramy Tipton, SVP Distribution Expansion and Consumer Markets. says of the product, “Processing the loss of a loved one takes an emotional toll on families and many often face financial stress while grieving. It is important for families and individuals to be prepared in order to help alleviate the financial burdens placed on loved ones during intensely sensitive times.  End-of-life medical, legal and funeral costs can be substantial. Aflac Final Expense is designed to help take that weight off grieving families’ shoulders so they can focus on what matters.”

Aflac’s Final Expense Whole Life Insurance is available in two options: the Level Plan and the Modified Plan. Both plans include a guaranteed level premium — meaning premiums will never increase — and a guaranteed death benefit paid to the beneficiary while the policy is active. The level plan also offers the option to elect accelerated and accidental death benefit riders, as well as a children’s term insurance rider.

Funeral Director Daily take:  Now, before I get skewered by industry people who will tell you that “Preneed” is not “Final Expense” insurance.  I understand that and I understand the differences between the products.  Part of my thought process is, however, the idea that if consumers have a “Final Expense” policy will they also purchase a “Preneed” policy? And in my thinking, I think a company life Aflac will be reaching out at the earlier ages of the age spectrum to get consumers enrolled as policyholders thus reducing the market numbers for potential Preneed.

Doing research on this article I came across a website for Best Life Rates which had a consumer survey I found very interesting.  Part of the survey listed present consumer financial concerns.  At the top of the list was Retirement – 24%, then Long-Term Care at 11%, then Investment Loss at 10%.  Way down near the bottom was “Funeral Costs” at 3%.

However, the same survey then asked consumers why they had purchased life insurance.  At the top was Income Replacement -37% and then came “Burial” at 30%.  Burial was actually ahead of “Mortgage” which came in at 27%.  I would guess that age ranges between Burial and Mortgage preferences were quite different with Mortgage a younger sect than Burial. . . but I don’t know.

Aflac is a very successful company with a great number of resources that has a very high share of what they have concentrated on for so long — “Supplemental Insurance”.  It appears to me that they may be expanding their “Market Share” reach with this new initiative and going for more “Wallet Share” of their consumers at this point.  And, because they have an existing relationship with consumers through their supplemental insurance policies already, they will be a force to reckon with in whatever lines of insurance they want to go after.

The move somewhat reminds me of my days on the regional board of Wells Fargo in Minnesota.  Wells Fargo, and its predecessor Norwest, always liked to grow market share.  However, onetime CEO Richard Kovacevich coined the term “Wallet Share” as he felt we should not be satisfied with market share increases.  For instance, once we had a consumer’s bank checking account then we should try to get more from that consumer such as their mortgage, their home insurance, their investments.  He termed these additional products coming to our bank as “expanded wallet share” from an existing customer.

This following quote is from a 2007 article in Institutional Investor about Kovacevich and “wallet share”.  “In community banking, where Wells serves 11 million households, the average customer uses 5.5 Wells products; 22 percent of its customers use more than eight. No other bank approaches those cross-selling figures.”

Since these consumers were already Wells Fargo customers, he felt we had a good chance to pull these additional financial services into our system by courting these customers.  That’s exactly what I can see Aflac looking at doing.

By the way, you can increase business by getting “Wallet Share” of your current funeral home clients by not only offering dispositions such as earth burial and cremation, but by reaching out for preneed and monuments also. . . and if you have an event center type building you can also reach out for family celebrations.

I’ve found that “Wallet Share” mining of current customers reduces your customer acquisition costs of your ancillary businesses.

Back to Aflac —  With over 50 million current supplemental policyholders and the financial resources they have at their disposal, Aflac will be a force in final expense insurance. . . and if they choose to streamline into a preneed policy also, they will be a force to reckon with there as well.

More news from the world of Death Care:

• The ultimate way to one-up inflation:  Prepaying for your own funeral.  Yahoo Finance
• Private Burial Grounds and Cemetery Bill.  UK Parliament (United Kingdom)
• Owner, operator of cemetery responds to concerns about conditions at mausoleum.  WCHS Eyewitness News – Kanawha County (WV)
• The Plymouth ex-nurse who now embalms the dead.  Plymouth News (United Kingdom)

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