Preneed: Your funeral home’s reputation may be tied to your preneed provider

October 2, 2026/Preneed, Regulations/

I came across an interesting article the other day that reminded me of the unease that I always had in selecting our funeral home’s preneed insurance partner. My unease had nothing to do with how we sold preneed and our expected acceptance of it at the time of death.

My unease came from the fact that I was a funeral director and not an accountant or forensic accountant in looking at financial statements of insurance companies to understand their financial strength to pay their obligations to families that relied on them in order to cover the costs of funeral expenses. With my limited financial training I would ask myself, “How am I supposed to know which companies are the strongest?”

And, couple that with the fact that I had the experience of having to administer an estate that held $250,000 of life insurance from the largest financial failure of a life insurance company in American history to that date back in the 1990’s. That company was Executive Life Insurance Company of which you can read an archived article of the situation from the Los Angeles Times here.

Tom Anderson
Funeral Director Daily

Fortunately for that estate, at the end of the day, regulators were able to step in and pay Death Benefit Claims in full, but cash value of policies was not accessible and other investment instrument types did suffer some very large financial losses. That experience has made me both leery of insurance company perceived strength as well as gave me some confidence in state insurance regulators to understand financial situations and not allow companies without the requisite financial strength from operating in our state.

Those type of experiences brought home the reality to me that if I selected a preneed partner that had financial difficulties, it wasn’t just the preneed partner that was in trouble. . . . it was my funeral home as well.

That has led me to believe that doing the available due diligence on who your preneed insurance company partner is, is serious business.

I picked the preneed company that our funeral home partnered with on lots of different variables which included history of the firm, growth rate of policies, face value of policies in relation to premiums paid, and commissions paid. On a non-data basis I also had to have a good rapport with whomever was representing the company in our area because I was generally full of questions about products and operational aspects.

I also would look at the A.M. Best ratings of the company to learn anything that I could about the actual financial strength of the company as seen by A.M Best. To learn a little about A.M. Best ratings click here.

Finally, and probably because of my experience with the estate and the Executive Life Insurance Company, it was important that the company was in good standing with our state’s insurance commission. I did not want my preneed clients to hear something negative about the company that our funeral home was suggesting where they place their hard earned assets in for safekeeping.

That brings me to the article that I recently read that started me on this subject. I’m also not going to comment on the specific merits of the situation in the linked article because I feel it is better that you read the article yourself and learn the situation to form your own opinions.

Here is the recent (September 17) article from Insurance NewsNet that starts out by saying “South Carolina insurance regulators are taking another shot at placing two Advantage Capital Holdings-owned insurers into rehabilitation. . . . . .Rehabilitation is a process through which financially-distressed insurers are placed into receivership with the intent of identifying the source of any underlying financial issues and working to remedy them. . . . If the court grants the petition, the insurers will be placed under the department’s control so regulators can thoroughly vet their finances.”

Director Michael Wise of the South Carolina Department of Insurance made this comment in the article, “Filing this petition was a necessary step to protect policyholders and the broader public. The department has been closely monitoring a number of concerning signs about the companies’ finances.”

You have probably figured out that the reason for today’s Funeral Director Daily article is that at least one of those companies is in the preneed business.

Preneed Related — The following is an article pertaining to the distribution of the remaining funds in the Safe Hands funeral funding failure in Great Britain. 46,000 policyholders were affected. The article is titled, “Anger at ‘insulting’ defunct funeral firm refunds”. Published by BBC News

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