Funeral Directors Life announces “Growth Rate” increase

I happened to look at the cash sitting in my Money Market account the other day and noticed I was receiving more interest than I had been recently.  I took out my calculator and realized that my John Hancock Money Market account was paying me 3% interest.  For savers, that’s the upside of the Federal Reserve Board continuing to raise interest rates to try to lower inflation.

The “flip-side” of that nice 3% rate is that I’m still losing actual bang for my buck if prices are going up 6-9% because of inflation.  And, that’s why it is imperative that inflation gets brought under control because American’s lose “buying power” when inflation goes higher than the amounts we can earn.

Every business has to strategize and deal with those realities also.  So, it was with great interest (pun intended) that I received a press release from Funeral Directors Life (FDL) that announced that they will be raising their “growth rates” for all new business done through their preneed product offerings.  The release reminded me that funeral homes should periodically check out their preneed providers to make sure that the rates being credited on accounts can keep up with the anticipated inflationary costs. . . or at least attempt to do so.

Here’s some of what FDL’s President and CEO Kris Seale said of the increase, “These are exciting times because we haven’t seen interest rates increase like this in years. . . . We want our customers to participate in the upside. . . .That’s why we will continue to monitor the interest rate environment, making decisions we hope to be sustainable.”

Funeral Director Daily take:  Just seeing this rate increase notice would make me aware of the company, as a funeral home, that I choose to partner with to offer preneed services to my clientele is doing with their rates.  In addition to owning a funeral home I also was a licensed preneed insurance agent and owned a preneed agency.

Tom Anderson
Funeral Director Daily

When I looked at companies to partner with I looked at five criteria.  Oddly enough, the major one was not the “strength” of the company.  I looked at ratings, but quite frankly, I left that to the State of Minnesota.  I had no experience in the accounting world to validate one’s strength or weakness, while the Minnesota Insurance Commission and the Secretary of State’s office was given those responsibilities.  I figured if they were accepted by the State of Minnesota criteria and allowed to do business in Minnesota, then they would be strong enough to offer to my consumers.

The 2nd criteria, that I looked at, and to some extent all companies were pretty comparable in this, was how the company itself would help me out?  Would they do mail drops?  Would they give me camera-ready ads to go in my newspaper or on cable television?  Would they help with seminars?

Finally, I looked at the financial performance for both me and my clients.  I came to realize that every company in the preneed space had these variables to juggle with in how they performed for the funeral home agent, the funeral home client, and insurance company itself.

  1. Rate of Bump – (I refer to “Bump” as the immediate value of the death benefit over the cash invested in a single premium policy)
  2. Rate of Growth – (What is the death benefit annual growth)
  3. Rate of Commission – (What the agent gets paid)

Every preneed company is going to deal with those three items.  Do they reward the policy-holder,  do they reward the funeral home/agent, or do they reward themselves.  When you look at the differing companies in the preneed space it is my belief that there are some companies in each of those categories.  None is inherently right or wrong. . . it is a value judgement on your part on how you want that financial relationship to work.

As Funeral Directors Life has made aware with their recent press release, some of these numbers and equations are changing because of the inflationary environment we are living in.  My guess is that all of the companies are calculating and re-calculating their financial options to be as competitive as they can be going forward.  It’s probably a good time to take a look at your preneed provider and see where they stand on these growth number changes.

Related–  I’ve been really fortunate at Funeral Director Daily to have two sponsors with me almost from Day 1 who are in the Preneed space.  First of all, Great Western Insurance Company (GWIC) was founded by funeral director John E. Lindquist in 1983 and offers several preneed plans to choose from.  Here’s a product from GWIC that extolls the virtue of high growth.

Secondly, Laker Planning is a preneed agency and marketer that can increase your appointments through their efforts.  They specialize in helping you secure the right companies and strategies to grow your preneed business.  An Alabama based company, I had the chance to sit down over lunch when their President, Patrick Zalusky, was traveling Minnesota and seeing clients.  We had a great visit and I learned a lot from him. . . I think any funeral home would.  You can reach Pat at lakerp.@aol.com

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