By Nadene Smith, Director of Business Services
We can probably all agree that funeral service has changed dramatically in the past few years. And things have changed even more since the pandemic!
That is why many funeral homes are looking for ways to remain cash flow positive in these challenging times. As I’ve talked with funeral homes over the past few months, the same things have been coming up over and over again:
- We need help! We’re handling more deaths and are short staffed and don’t have time to deal with insurance companies!
- Insurance companies are keeping us on hold for 2 to 4 hours to verify a policy.
- We are having to keep the family waiting to know if they can pay for the funeral with insurance.
- Insurance companies keep saying they didn’t get our fax or forms, and we have to constantly chase them down to make sure they are doing their job.
- Insurance companies say everything is good, but then they come back later and say it isn’t. The funeral is over, and we haven’t been paid.
After so many of these conversations with funeral directors, I thought it was time to share some solutions with you! Here are the top five tips for increasing your cash flow and profitability with your next at-need call.
Tip #1: Offer life insurance assignments up-front.
For many families who come into the arrangement conference, the question that is first and foremost in their minds is, “How much is this going to cost?” and maybe more importantly, “How am I going to pay for this?” In speaking with funeral homes across the nation, we have found that those who explain the option of life insurance assignment to their families up-front see an increase of approximately 30% on their at-need contracts. This method has been tested on both large and small firms, all with the same results. That is because offering life insurance assignments puts the family at ease knowing that they can pay for the service that they want, without cutting corners. Now, that’s a win-win! If you have not already, it is time to start offering life insurance assignments to your families before you begin the planning process, not after.
Tip #2: Free up your staff’s time by getting help from an assignment processing company.
Many funeral homes are still making the mistake of processing their own life insurance assignments in-house. This mistake could cost you more than you even realize. Life insurance assignments create more work for the funeral home, tie up your staff’s time, and can dramatically affect your cash flow, delaying payment for services for 6 to 8 weeks or more. In addition, every insurance company has its own requirements, and often make changes to claim forms, meaning that your payment will be delayed even further. Any delay with death certificates, a pending coroner’s case, or new at-need families coming through your door means that assignments can sit on your desk unattended for months. It just doesn’t have to be that way. Assignment companies can fund within a few days and then handle all the changing requirements and requests from the insurance company, at no cost to the funeral home. Doing your assignments in-house can stall out your cash flow and inflate your accounts receivables very quickly, especially if you get busy. It just doesn’t make sense to tie up your own time or your staff’s time when you could be using that time to enhance your service to families.
Tip #3: Stop assuming all the risk.
Life insurance assignments can be risky to take on because there is always the chance that the claim could be denied. And then you’re left holding the bag or have to go back to the family to request an alternate form of payment. No, thank you! To minimize your risk when accepting insurance assignments, you can work with an advance funding company that guarantees their verification of a policy’s benefits. Be sure to check the fine print, here! Not all funding companies are created equal. Some will seek repayment of advanced funds plus interest if the claim ends up being denied. As long as you are working with a company that guarantees their own verification process and offers 100% risk-free advanced funds, you know that when you take an assignment, it won’t come back to bite you. Do yourself a favor, and make sure that your assignment company is providing this crucial service guarantee.
Tip #4: Work with professionals who can spot those red flags.
When an insurance assignment is not something you deal with on a regular basis, you can miss the red flags. Did you know that some policies have exclusions for a death caused by a pandemic? Are there loans or liens against a policy? If you miss this red flag, there may be nothing available to pay out from the policy. Is a policy assignable? This is another red flag that if missed, can leave you with an unpaid contract. Is the beneficiary contestable? Often, policies are not updated after divorce or death. Or the beneficiary could be a trust or a minor. All of these are red flags that most funeral directors don’t see coming, which can become costly mistakes for the funeral home. However, an insurance assignment company has expertise in all types of policies because they handle thousands of cases per year, and they know exactly what to look for and what to ask when verifying the policy benefits.
Tip #5: Don’t leave money on the table.
Many funeral homes miss out on the opportunity to grow the future of their business with each life insurance assignment. They are essentially leaving money on the table! How? Well, depending on the insurance assignment partner you use, you have the option to offer your families advanced payment on a portion or all of the remaining policy benefits. This is the perfect opportunity to discuss prearrangements. With money in hand, many families are willing to plan ahead and alleviate the burdens on their loved ones, so those decisions are not left for others in the future. So, life insurance assignments can not only help you increase your at-need contract size by an average of 30%, they can also help you grow your preneed block of business and further secure the future of your funeral home.
Bonus Tip: Offer insurance assignment services to everyone, regardless of their payment method.
Even if the family is planning to pay with cash, credit card, preneed plan, or any other payment method, doesn’t mean that they won’t be interested in getting an advance payment on their insurance claim. Who knows? They may need those funds for immediate needs. With available cash, families will feel less financial stress and pressure (see tip #1!) and they may be more likely to plan ahead (tip #5). Plus, offering this service even if they don’t need it to pay for the funeral creates value for that family and offers them a better experience than the insurance company will be able to provide them…And you get to be the hero to the families you serve.
When looking for an assignment company to work with, I encourage you to do your due diligence. Find out if you are taking on extra risk with your current assignment company. Really look at your accounts receivable and see how much of that balance could be taken care of with one phone call to a reputable advance funding company. Overall, working with a company you can trust will improve your cash flow, put more time into your day, help you offer families a valuable service and a better experience, and give you more time to dedicate to the families you serve. By following these simple principles, you will be on your way to a healthier business, less stress, and better cash flow for your business.
About the Author: Nadene Smith serves as Director of Business Services for CLAIMCHECK. She has over 10 years of experience in the preneed insurance industry. Having recently lost her husband, Nadene brings a compassionate perspective to fast funding business, understanding how difficult it can be to work with insurance companies directly to process claims. Nadene is passionate about helping families and funeral homes navigate this difficult process when time is of the essence. To contact Nadene, email her at [email protected]com.