Trust vs. Life Insurance

Pre-need master trust and insurance fill the same need.

But they are not the same.

There are major differences between a pre-need master trust and insurance.  As a business owner, you must understand the impact of these two options on customer service and on your bottom line.

100% of contract price invested Only a portion of contract price is invested
Historical higher earnings Earnings capped
Final value based on investment earnings Pays back at least contract value
Can be structured with a commission Small commission (which you must pay back if the claim comes during the contestable period)
100% refundable with Abbit May be non-refundable; can lose up to 50%
Fixed management fee regulated by law Fee is arbitrary and not regulated by law

A pre-need master trust places 100% of your contract price into investments. While there may be short-term fluctuations in value, the investments have traditionally seen upward trends over the long term. Your earnings on a pre-need trust can be used to cover the gap between today’s costs and tomorrow’s costs.

An insurance policy, on the other hand, has extremely limited growth potential. By law, a percentage of the contract must be held in reserve, and there is a cap on your earnings. That means only a portion of the contract is earning anything. You’re automatically earning less than you would with the same contract invested in a pre-need master trust.

Here are some additional points to consider.

Changing details. If your client wants to change the beneficiary on a pre-need master trust…no problem. We can help you with the paperwork. If they want to change the beneficiary on an insurance policy…it can’t be done.

Change of heart. Sometimes clients change their minds. If you’ve sold a pre-need master contract and deposited the funds in a pre-need trust from Abbit, they can get their money back. If you’ve deposited the funds into insurance, they could lose up to half their investment. That’s because the benefits are guaranteed only upon death…not upon a change of heart!

The sales process. We can teach your staff to present pre-need master trust in a way that’s commensurate with your philosophy about customer service. If you allow an insurance company to take over the role of customer interaction, whose interests do you think they will represent?