What to expect for a preneed commission schedule?

[Serena]

Hey team,

I am a licensed funeral director / insurance agent in the state of Connecticut. I have 6 years experience selling preneed for a corporation. I am now going out on my own to start my own thing and am curious what I should expect for a preneed commission schedule?

To give you an idea about my past production -- in 2020 I wrote $1.6 million out of 3 funeral homes and I expect that momentum to continue, or at least to stick above $1 million a year in preneed sales. As mentioned, I am a licensed funeral director as well and plan to work with multiple local funeral homes.

I will be going through a large marketing agency in hopes of raising the bar a bit.

Any thoughts or advice would be greatly appreciated. Working for a corporation is no longer for me, but it certainly had its perks and this is a whole new world for me.

Thanks in advance for any input!

-Serena

 

[Lawsonhj1]

If you can write that much on your own could top out over 30% on Multi Pays. Plan on a 25% reserve account.

 

[Newby]

Hey team,

I am a licensed funeral director / insurance agent in the state of Connecticut. I have 6 years experience selling preneed for a corporation. I am now going out on my own to start my own thing and am curious what I should expect for a preneed commission schedule?

To give you an idea about my past production -- in 2020 I wrote $1.6 million out of 3 funeral homes and I expect that momentum to continue, or at least to stick above $1 million a year in preneed sales. As mentioned, I am a licensed funeral director as well and plan to work with multiple local funeral homes.

I will be going through a large marketing agency in hopes of raising the bar a bit.

Any thoughts or advice would be greatly appreciated. Working for a corporation is no longer for me, but it certainly had its perks and this is a whole new world for me.

Thanks in advance for any input!

-Serena

Yes a bit over 30% is what is available. But depending on the funeral homes you sell for you might get it all or might have to make a split. It depends on what you set up with them.

 

[Allen Trent]

be careful to not put all your eggs in 1 basket. these funeral plans without underwriting are likely to be hardest hit by some issues surrounding the low interest rate environment & non-forfeiture regulatory rates dropping. It is getting very hard for the carrier to collect a premium that isnt as much or more than the death benefit to make the math work for them to profit after expenses & commissions. There are not many places for carriers to invest the premiums or lump sum to make any interest today in the very short turnaround time between policy issuance & claim payment on funeral plans. one of the only places they could improve their assumptions could be by lowering commissions or leaving the marketplace all together.

not trying to be negative, just saying it is a serious math problem today for all insurance carriers, but funeral plans may even be harder because of the nature of the design & the lack of Underwriting,etc

 

[Lawsonhj1]

Commissions are important but when going out on your own selling preneed; relationships with the owners of funeral homes is of upmost importance. First you need establishments who will accept your business. Second you may have to lower your standards. If they don't trust you and you don't trust them it won't work. Most non corporate funeral homes that are the kind you want either take care of business in house or through one of the marketing organizations so commissions will be lower.

 

[Lawsonhj1]

be careful to not put all your eggs in 1 basket. these funeral plans without underwriting are likely to be hardest hit by some issues surrounding the low interest rate environment & non-forfeiture regulatory rates dropping. It is getting very hard for the carrier to collect a premium that isnt as much or more than the death benefit to make the math work for them to profit after expenses & commissions. There are not many places for carriers to invest the premiums or lump sum to make any interest today in the very short turnaround time between policy issuance & claim payment on funeral plans. one of the only places they could improve their assumptions could be by lowering commissions or leaving the marketplace all together.

not trying to be negative, just saying it is a serious math problem today for all insurance carriers, but funeral plans may even be harder because of the nature of the design & the lack of Underwriting,etc

Most funeral plans funded by insurance have guaranteed issue and level coverage options. The average preneed funeral is on the books for about seven years, sorry no source just experience. The carriers have it figured out I wouldn't be as concerned about them I would worry about your clients that could have been served better with a different type of policy other than a funeral plan. I have done preneed since 1989 so this is difficult to say but most people would be better off without a fixed price funeral plan and better served with a final expense policy. The only people in my opinion should buy preneed should 1) pay cash or take advantage of since months same as cash or early payoff type option. 2) Funeral Spend down for Medicaid or make it irrevocable good for ward of court situations. 3) Higher age s 80+

 

[Tahoe Ray]

Most funeral plans funded by insurance have guaranteed issue and level coverage options. The average preneed funeral is on the books for about seven years, sorry no source just experience. The carriers have it figured out I wouldn't be as concerned about them I would worry about your clients that could have been served better with a different type of policy other than a funeral plan. I have done preneed since 1989 so this is difficult to say but most people would be better off without a fixed price funeral plan and better served with a final expense policy. The only people in my opinion should buy preneed should 1) pay cash or take advantage of since months same as cash or early payoff type option. 2) Funeral Spend down for Medicaid or make it irrevocable good for ward of court situations. 3) Higher age s 80+

I agree with all that you're saying here.

What Allen mentioned about these new regulations (that were stuck into the COVID bill in December for some ridiculous reason) is going to really hurt any type of "discounted" insurance strategy, though.

 

[Lawsonhj1]

I agree with all that you're saying here.

What Allen mentioned about these new regulations (that were stuck into the COVID bill in December for some ridiculous reason) is going to really hurt any type of "discounted" insurance strategy, though.

I have a simple mind what is meant by "discounted" insurance strategy in reference to preneed. Thick minded I am, but once it gets through.

 

[Tahoe Ray]

I have a simple mind what is meant by "discounted" insurance strategy in reference to preneed. Thick minded I am, but once it gets through.

My fault. I wasn't clear since that isn't really an industry term.

Pre-paying less money today for your funeral in the future is going to be more expensive (imo) under these new regs.

These products are like zero-coupon bonds, you buy one for a discount and when it "matures" you get the face amount.

If the assumption is 4% and the time frame is 10 years, then you can get a 1000 bond for 675 or so dollars. If the assumption is 2%, then that same bond costs $820.

If these new regs force insurance products to use new (lower) rates, then death benefit focused products may go up in price.

Nothing has happened yet but the regs seem to be requirements, rather than suggestions.

We'll have to wait and see how this shakes out, though.

 

[Lawsonhj1]

thanks got that part ,the thread starting referencing preneed commissions moved to funeral plans I assumed we are talking about a fixed price insurance funded prearranged funeral called "preneeds" by many who sell preneeds.

Funeral sellers expect things to go up in price if things ever leveled off or deflation hit it would turn them all into liars. Raising the price of anything plays into the theme, buy now before the price goes up.