How to Use Insurance Assignments to Improve Your Cash Flow

As a busy funeral professional, you work tirelessly to serve every family that comes through your door. And when it comes to getting paid for your services, it’s easy for life insurance assignments to pile up on your desk.

And when they do, you might try to set aside time to process those assignments. But no matter how quickly you work, you may still have to wait weeks or months for those pending payments to finally hit your bank account.

When it comes down to it, handling insurance assignments on your own is frustrating, stressful, and time-consuming. It doesn’t have to be that way.

In this blog post, we’ll share how you can increase your cash flow and profitability with your next at-need call using insurance assignments.

1. Offer Assignments Up-Front in the Arrangement Conference

Many families arrive at the arrangement conference thinking, “How much is this going to cost?” and “How am I going to pay for this?” A good way to ease your families’ concerns is to explain the option of life insurance assignments up front.

After talking with funeral directors nationwide, we found that those who do this see an increase of approximately 30% on their at-need contracts. This method has been tested on both large and small firms, and they all saw the same results. This is likely because sharing this option with families relieves them of the initial stress and fear of paying for funeral arrangements out of pocket. They can be at ease knowing they can pay for the service they want without cutting corners.

That’s a true win-win situation! If you don’t already, try offering insurance assignments to your families before you begin the planning process, not after.

2. Learn How to Avoid Delays in Assignment Processing

Many funeral homes still process their life insurance assignments in-house. Many don’t realize that manually processing assignments could cost you more than you 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.

On top of the up-front work taking up time, every insurance company has its own requirements and often make changes to claim forms, meaning that your payments get delayed even further. Any delay with death certificates, a pending coroner’s case, or new at-need families coming through your door mean that assignments can sit on your desk unattended for months.

It doesn’t have to be this way! Assignment companies can fund within a few days and then handle all the changing requirements and requests from the insurance company.

If you let experts handle your insurance assignments, you can free up your own time or your staff’s time to enhance service to families rather than spend it processing insurance assignments.

3. Don’t Assume All the Risk

When you take on a life insurance assignment, it can be a risk because there is always a chance the claim gets denied. And then you’re left holding the bag or have to go back to the family to request an alternative form of payment. No, thank you!

You can minimize your risk when accepting insurance assignments when you work with an advanced funding company that guarantees their verification of a policy’s benefits. But not all funding companies are created equal. Some will seek repayment of advanced funds plus interest if the claim gets denied.

As long as you are working with a company that guarantees its 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. Find an assignment company providing this crucial service guarantee, and you won’t have to assume all the risk anymore!

4. Work With an Insurance Assignment Company to Avoid Red Flags

When you do not deal with an insurance assignment regularly, it’s easy to miss the red flags. Here are a few examples:

  • What if you don’t catch that there are 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? If this gets missed, it 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 each year, and they know exactly what to look for and what to ask when verifying the policy benefits.

5. Present Prearrangement Options to Everyone

This fifth tip might surprise you. With insurance assignments, funeral homes can grow their business’s future. 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, insurance assignments can not only help you increase your at-need contract size by an average of 30%, but they can also help you grow your preneed block of business and further secure the future of your funeral home.

Bonus: Relieve Pressure on the Family

Even if the family plans to pay with cash, credit card, preneed plan, or any other payment method, it doesn’t mean 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, and may be more likely to plan ahead. 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 can provide them, and you get to be the hero to the families you serve.

Start using insurance assignments to improve your cash flow

Insurance assignments can be a gamechanger in improving your cash flow if you work with the proper funeral funding partner. When looking for a company to partner with, it’s important to do your research first.

Find out if you are taking extra risk with your current assignment company. Look closely at your accounts receivable and see how much of that balance could be handled with one phone call to a reputable advance funding company.

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.

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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 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].