Funeral Guardian Society

[jdeasy]

JD,

I am told that LH pays claims 24 hours after receiving the death certificate. Is this the case with your experience when you were writing LH policies?

It's 24 hours after death. Not after the death certificate. In Ky it can take 4 to 6 weeks to get the death certificate sometimes.

with LH this is only for policies that are out of contestability. I believe preneed to be different than that. It's my understanding that preneed doesn't matter about contestability. They pay whatever they were supposed to pay unpon the death.

 

[Newby]

Preneed policies will contest IF they are contestable but the health questions are very short. Aids, cancer with 3 years, heart disease or heart attacks/ strokes within 3 years, etc.

About half of Preneed policies are non contestable because they answered yes to one of the health issues. If they answered yes it's non-contestable and they have 70% coverage after month 12 with all of them and some will give 35% coverage after month 6. These are non-contestable because there is nothing to contest...everyone qualifies and there is no rate up for smokers.

Per-need insurance companies do not use death certificates for claims. They just need a licensed funeral director to sign their death claim form and the non-contestable claim is paid. That's the same thing ForeThought and Lincoln Heritage final expense policies require for claims.

Both of those companies will also pay the claim for ANY brand of insurance the same way. They charge a fee of between 4 to 5% for that service. If a family comes in a funeral home and has a Oxford or Foresters or Prudential or ANY brand of insurance that requires death certificates to settle, the funeral director just calls ForeThought and files a claim through them. ForeThought pays the claim within 24 hours and collects their money when the claim is eventually paid keeping 5% for themselves.

This has become a huge profit center because a 5% fee is equal to 60% APR if they get their money back within 30 days which they often do.

This keeps the funeral homes from becoming debt collectors and helps with their cash flow.

 

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Both of those companies will also pay the claim for ANY brand of insurance the same way. They charge a fee of between 4 to 5% for that service. If a family comes in a funeral home and has a Oxford or Foresters or Prudential or ANY brand of insurance that requires death certificates to settle, the funeral director just calls ForeThought and files a claim through them. ForeThought pays the claim within 24 hours and collects their money when the claim is eventually paid keeping 5% for themselves.

This has become a huge profit center because a 5% fee is equal to 60% APR if they get their money back within 30 days which they often do.

This keeps the funeral homes from becoming debt collectors and helps with their cash flow.

Let me see if I got this correctly: A family comes into the funeral home and submits the deceased's life insurance beneficiary form with them named. The Funeral Home accepts it as payment by filing a claim with ForeThought, who then subrogates the claim back to the deceased's life insurance company. Did I get this right?

 

[Newby]

Let me see if I got this correctly: A family comes into the funeral home and submits the deceased's life insurance beneficiary form with them named. The Funeral Home accepts it as payment by filing a claim with ForeThought, who then subrogates the claim back to the deceased's life insurance company. Did I get this right?

Basically you have it right. A licensed funeral director has to sign off on it that they have verified the death (there is no death certificate that quickly.)

The insurance assignment company (can be ForeThought, Lincoln Heritage or about a dozen others) has to verify with the insurance company who the beneficiaries are and how much death benefit there is after loans etc and that it is non-contestible. They also have to make sure the policy is assignable (some group policies are not and ANY policy that doesn't have a named live beneficiary is not assignable.

The assignment company wire transfers the death benefit to the funeral home or the beneficiary the same day.

This is a huge business that didn't exist 10-years ago. Every funeral you see in the newspaper if they didn't have a preplan and aren't writing a check or paying cash or credit card will likely be assigned to an assignment company. 5% charge each time. https://www.forethought.com/insuranceassignmentsinfo

 

[360]

That's the same thing ForeThought and Lincoln Heritage final expense policies require for claims.

Does Forethought charge that same 5% fee for the advance on their own policies or just for outside policies?

 

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Does Forethought charge that same 5% fee for the advance on their own policies or just for outside policies?

Good question. Before Newby jumps in with the answer, let me hazard a guess: Yes.

My reasoning: Forethought Capital Funding, Inc.’s at-need insurance assignment program is separate from Forethought Life Insurance, both of which are subsidiaries of Forethought Financial. I think a lot of companies see their own subsidiaries as competitors.

 

[360]

I've never asked them. They do list in their agent guide:

"Upon death of the insured, beneficiaries receive the full policy amount within 48 hours". (certain restrictions apply)

I'm assuming the certain restrictions are the contestability period. Would be a nice value add for the FE product if there is no funding fee in that they are getting the entire death benefit, not the DB less the funding fee as they will with every other FE company except I guess LH.

 

[retread]

I've never asked them. They do list in their agent guide:

"Upon death of the insured, beneficiaries receive the full policy amount within 48 hours". (certain restrictions apply)

I'm assuming the certain restrictions are the contestability period. Would be a nice value add for the FE product if there is no funding fee in that they are getting the entire death benefit, not the DB less the funding fee as they will with every other FE company except I guess LH.

I agree, and I see no reason for them not to, but logic usually does not prevail when money is involved. However, Forethought is the leader in pre-need insurance and has a lot of business relationships with Funeral Homes. It may be that other Funeral Home alliances such as SCI could pose a problem if a Forethought policy was presented to one of theirs. Again, I am guessing that they would have a policy that would be applicable to all Final Expense policies, even one from Forethought Life. Perhaps Forethought Capital Funding does not make their offer in SCI or similar funeral homes. How about it Newby? Inquiring minds want to know!

 

[Newby]

ForeThought policies do not need the ForeThought Capitol funding because they pay claims just like Preneed policies do (24 to 48 hours after death with no death certificate needed.)

The ForeThought funeral network is not really a network at all. All funeral homes know who ForeThought is and they all accept ForeThought policies. SCI is not a competitor to ForeThought. At various time they are business partners. Back before SCI bought American Memorial Life they sold ForeThought Preneed policies. Then they (SCI) bought their own insurance company (American Memorial Life) then they sold American Memorial Life to Assurant then Assurant pulled out of the Preneed business altogether except the SCI American Memorial division and guess who bought Assurant's Preneed division? That's right...ForeThought.

It's a small industry and ForeThought has been a big player in it.

 

[retread]

ForeThought policies do not need the ForeThought Capitol funding because they pay claims just like Preneed policies do (24 to 48 hours after death with no death certificate needed.)

The ForeThought funeral network is not really a network at all. All funeral homes know who ForeThought is and they all accept ForeThought policies. SCI is not a competitor to ForeThought. At various time they are business partners. Back before SCI bought American Memorial Life they sold ForeThought Preneed policies. Then they (SCI) bought their own insurance company (American Memorial Life) then they sold American Memorial Life to Assurant then Assurant pulled out of the Preneed business altogether except the SCI American Memorial division and guess who bought Assurant's Preneed division? That's right...ForeThought.

It's a small industry and ForeThought has been a big player in it.

Scott, you da man! That blows my guessing out of the water!

Next question... (begging).... are there any other FE/Burial/Preneed policies that provide rapid payout like Forethought, or are they unique in this regard?